Correlation Between Angel Oak and MFS Government
Can any of the company-specific risk be diversified away by investing in both Angel Oak and MFS Government 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 MFS Government 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 MFS Government Markets, you can compare the effects of market volatilities on Angel Oak and MFS Government 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 MFS Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and MFS Government.
Diversification Opportunities for Angel Oak and MFS Government
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Angel and MFS is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Financial and MFS Government Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Government Markets 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 MFS Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Government Markets has no effect on the direction of Angel Oak i.e., Angel Oak and MFS Government go up and down completely randomly.
Pair Corralation between Angel Oak and MFS Government
Given the investment horizon of 90 days Angel Oak Financial is expected to under-perform the MFS Government. But the stock apears to be less risky and, when comparing its historical volatility, Angel Oak Financial is 1.38 times less risky than MFS Government. The stock trades about -0.18 of its potential returns per unit of risk. The MFS Government Markets is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 317.00 in MFS Government Markets on August 28, 2024 and sell it today you would lose (5.00) from holding MFS Government Markets or give up 1.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Angel Oak Financial vs. MFS Government Markets
Performance |
| Timeline |
| Angel Oak Financial |
| MFS Government Markets |
Angel Oak and MFS Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Angel Oak and MFS Government
The main advantage of trading using opposite Angel Oak and MFS Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Angel Oak position performs unexpectedly, MFS Government 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 MFS Government will offset losses from the drop in MFS Government'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 |
| MFS Government vs. MFS Investment Grade | MFS Government vs. Invesco High Income | MFS Government vs. Eaton Vance National | MFS Government vs. Nuveen California Select |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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