Correlation Between Profunds Large and Angel Oak

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Can any of the company-specific risk be diversified away by investing in both Profunds Large 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 Profunds Large and Angel Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Profunds Large Cap Growth and Angel Oak Multi Strategy, you can compare the effects of market volatilities on Profunds Large 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 Profunds Large with a short position of Angel Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profunds Large and Angel Oak.

Diversification Opportunities for Profunds Large and Angel Oak

-0.65
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Profunds and Angel is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Profunds Large Cap Growth and Angel Oak Multi Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angel Oak Multi and Profunds Large 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 Profunds Large Cap Growth 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 Multi has no effect on the direction of Profunds Large i.e., Profunds Large and Angel Oak go up and down completely randomly.

Pair Corralation between Profunds Large and Angel Oak

Assuming the 90 days horizon Profunds Large Cap Growth is expected to generate 5.04 times more return on investment than Angel Oak. However, Profunds Large is 5.04 times more volatile than Angel Oak Multi Strategy. It trades about 0.1 of its potential returns per unit of risk. Angel Oak Multi Strategy is currently generating about 0.14 per unit of risk. If you would invest  2,474  in Profunds Large Cap Growth on August 31, 2024 and sell it today you would earn a total of  993.00  from holding Profunds Large Cap Growth or generate 40.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy99.73%
ValuesDaily Returns

Profunds Large Cap Growth  vs.  Angel Oak Multi Strategy

 Performance 
       Timeline  
Profunds Large Cap 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Profunds Large Cap Growth are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Profunds Large may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Angel Oak Multi 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Angel Oak Multi Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Angel Oak is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Profunds Large and Angel Oak Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Profunds Large and Angel Oak

The main advantage of trading using opposite Profunds Large and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profunds Large 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.
The idea behind Profunds Large Cap Growth and Angel Oak Multi Strategy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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