Correlation Between Angel Oak and DWS Municipal
Can any of the company-specific risk be diversified away by investing in both Angel Oak and DWS Municipal 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 Angel Oak and DWS Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Angel Oak Financial and DWS Municipal Income, you can compare the effects of market volatilities on Angel Oak and DWS Municipal 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 Angel Oak with a short position of DWS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and DWS Municipal.
Diversification Opportunities for Angel Oak and DWS Municipal
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Angel and DWS is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Financial and DWS Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DWS Municipal Income and Angel Oak 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 Angel Oak Financial are associated (or correlated) with DWS Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DWS Municipal Income has no effect on the direction of Angel Oak i.e., Angel Oak and DWS Municipal go up and down completely randomly.
Pair Corralation between Angel Oak and DWS Municipal
Given the investment horizon of 90 days Angel Oak Financial is expected to under-perform the DWS Municipal. But the stock apears to be less risky and, when comparing its historical volatility, Angel Oak Financial is 1.37 times less risky than DWS Municipal. The stock trades about -0.11 of its potential returns per unit of risk. The DWS Municipal Income is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 963.00 in DWS Municipal Income on August 31, 2024 and sell it today you would earn a total of 37.00 from holding DWS Municipal Income or generate 3.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Angel Oak Financial vs. DWS Municipal Income
Performance |
| Timeline |
| Angel Oak Financial |
| DWS Municipal Income |
Angel Oak and DWS Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Angel Oak and DWS Municipal
The main advantage of trading using opposite Angel Oak and DWS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Angel Oak position performs unexpectedly, DWS Municipal 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 DWS Municipal will offset losses from the drop in DWS Municipal's long position.| Angel Oak vs. Eaton Vance National | Angel Oak vs. Invesco High Income | Angel Oak vs. Blackrock Muniholdings Ny | Angel Oak vs. Nuveen California Select |
| DWS Municipal vs. DTF Tax Free | DWS Municipal vs. Blackrock Muniyield Quality | DWS Municipal vs. Blackrock Muni Intermediate | DWS Municipal vs. Blackrock Muniholdings Quality |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |