Correlation Between Columbia Small and Angel Oak
Can any of the company-specific risk be diversified away by investing in both Columbia Small and Angel Oak at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Columbia Small and Angel Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Small Cap and Angel Oak Financial, you can compare the effects of market volatilities on Columbia Small and Angel Oak and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Columbia Small with a short position of Angel Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Small and Angel Oak.
Diversification Opportunities for Columbia Small and Angel Oak
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Columbia and Angel is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Small Cap and Angel Oak Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angel Oak Financial and Columbia Small is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Columbia Small Cap are associated (or correlated) with Angel Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Angel Oak Financial has no effect on the direction of Columbia Small i.e., Columbia Small and Angel Oak go up and down completely randomly.
Pair Corralation between Columbia Small and Angel Oak
Assuming the 90 days horizon Columbia Small Cap is expected to generate 6.18 times more return on investment than Angel Oak. However, Columbia Small is 6.18 times more volatile than Angel Oak Financial. It trades about 0.12 of its potential returns per unit of risk. Angel Oak Financial is currently generating about 0.07 per unit of risk. If you would invest 2,099 in Columbia Small Cap on September 2, 2024 and sell it today you would earn a total of 968.00 from holding Columbia Small Cap or generate 46.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Small Cap vs. Angel Oak Financial
Performance |
| Timeline |
| Columbia Small Cap |
| Angel Oak Financial |
Columbia Small and Angel Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Small and Angel Oak
The main advantage of trading using opposite Columbia Small and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Small position performs unexpectedly, Angel Oak can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Angel Oak will offset losses from the drop in Angel Oak's long position.| Columbia Small vs. Dunham Real Estate | Columbia Small vs. Pender Real Estate | Columbia Small vs. Jhancock Real Estate | Columbia Small vs. Simt Real Estate |
| Angel Oak vs. Vanguard Total Stock | Angel Oak vs. Vanguard 500 Index | Angel Oak vs. Vanguard Total Stock | Angel Oak vs. Vanguard Total Stock |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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