Correlation Between American Funds and Angel Oak
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Angel Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2020 and Angel Oak Ultrashort, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Angel Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Angel Oak.
Diversification Opportunities for American Funds and Angel Oak
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Angel is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2020 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 American Funds 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 American Funds 2020 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 American Funds i.e., American Funds and Angel Oak go up and down completely randomly.
Pair Corralation between American Funds and Angel Oak
Assuming the 90 days horizon American Funds 2020 is expected to generate 5.1 times more return on investment than Angel Oak. However, American Funds is 5.1 times more volatile than Angel Oak Ultrashort. It trades about 0.09 of its potential returns per unit of risk. Angel Oak Ultrashort is currently generating about 0.24 per unit of risk. If you would invest 1,134 in American Funds 2020 on September 12, 2024 and sell it today you would earn a total of 304.00 from holding American Funds 2020 or generate 26.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
American Funds 2020 vs. Angel Oak Ultrashort
Performance |
| Timeline |
| American Funds 2020 |
| Angel Oak Ultrashort |
American Funds and Angel Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Angel Oak
The main advantage of trading using opposite American Funds and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Pace Large Growth | American Funds vs. Upright Assets Allocation | American Funds vs. Aqr Large Cap | American Funds vs. Old Westbury Large |
| Angel Oak vs. SCOR PK | Angel Oak vs. Morningstar Unconstrained Allocation | Angel Oak vs. Via Renewables | 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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