Correlation Between Dow Jones and Angel Oak
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Angel Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Angel Oak Ultrashort, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Angel Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Angel Oak.
Diversification Opportunities for Dow Jones and Angel Oak
Very poor diversification
The 3 months correlation between Dow and Angel is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Angel Oak Ultrashort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angel Oak Ultrashort and Dow Jones 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 Dow Jones Industrial 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 Ultrashort has no effect on the direction of Dow Jones i.e., Dow Jones and Angel Oak go up and down completely randomly.
Pair Corralation between Dow Jones and Angel Oak
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 21.61 times more return on investment than Angel Oak. However, Dow Jones is 21.61 times more volatile than Angel Oak Ultrashort. It trades about 0.06 of its potential returns per unit of risk. Angel Oak Ultrashort is currently generating about 0.33 per unit of risk. If you would invest 4,292,489 in Dow Jones Industrial on August 23, 2024 and sell it today you would earn a total of 48,358 from holding Dow Jones Industrial or generate 1.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dow Jones Industrial vs. Angel Oak Ultrashort
Performance |
| Timeline |
Dow Jones and Angel Oak Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Angel Oak Ultrashort
Pair trading matchups for Angel Oak
Pair Trading with Dow Jones and Angel Oak
The main advantage of trading using opposite Dow Jones and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Barrick Gold Corp | Dow Jones vs. Jutal Offshore Oil | Dow Jones vs. Eastern Co | Dow Jones vs. Weyco Group |
| Angel Oak vs. T Rowe Price | Angel Oak vs. T Rowe Price | Angel Oak vs. Ab Tax Aware Short | Angel Oak vs. BondBloxx ETF Trust |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |