Correlation Between Western Asset and Angel Oak
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Angel Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Global and Angel Oak Financial, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Angel Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Angel Oak.
Diversification Opportunities for Western Asset and Angel Oak
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and Angel is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Global 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 Western Asset 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 Western Asset Global 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 Western Asset i.e., Western Asset and Angel Oak go up and down completely randomly.
Pair Corralation between Western Asset and Angel Oak
Considering the 90-day investment horizon Western Asset Global is expected to generate 1.17 times more return on investment than Angel Oak. However, Western Asset is 1.17 times more volatile than Angel Oak Financial. It trades about -0.13 of its potential returns per unit of risk. Angel Oak Financial is currently generating about -0.18 per unit of risk. If you would invest 1,174 in Western Asset Global on August 27, 2024 and sell it today you would lose (18.00) from holding Western Asset Global or give up 1.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Global vs. Angel Oak Financial
Performance |
| Timeline |
| Western Asset Global |
| Angel Oak Financial |
Western Asset and Angel Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Angel Oak
The main advantage of trading using opposite Western Asset and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Western Asset High | Western Asset vs. Western Asset Global | Western Asset vs. European Equity Closed | Western Asset vs. Doubleline Opportunistic Credit |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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