Correlation Between New York and Angel Oak
Can any of the company-specific risk be diversified away by investing in both New York 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 New York and Angel Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New York Mortgage and Angel Oak Mortgage, you can compare the effects of market volatilities on New York 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 New York with a short position of Angel Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of New York and Angel Oak.
Diversification Opportunities for New York and Angel Oak
Poor diversification
The 3 months correlation between New and Angel is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding New York Mortgage and Angel Oak Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angel Oak Mortgage and New York 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 New York Mortgage 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 Mortgage has no effect on the direction of New York i.e., New York and Angel Oak go up and down completely randomly.
Pair Corralation between New York and Angel Oak
Given the investment horizon of 90 days New York Mortgage is expected to generate 0.99 times more return on investment than Angel Oak. However, New York Mortgage is 1.01 times less risky than Angel Oak. It trades about 0.35 of its potential returns per unit of risk. Angel Oak Mortgage is currently generating about 0.2 per unit of risk. If you would invest 528.00 in New York Mortgage on August 27, 2024 and sell it today you would earn a total of 70.00 from holding New York Mortgage or generate 13.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New York Mortgage vs. Angel Oak Mortgage
Performance |
| Timeline |
| New York Mortgage |
| Angel Oak Mortgage |
New York and Angel Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New York and Angel Oak
The main advantage of trading using opposite New York and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New York 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.| New York vs. Two Harbors Investments | New York vs. ARMOUR Residential REIT | New York vs. Annaly Capital Management | New York vs. AGNC Investment Corp |
| Angel Oak vs. Granite Point Mortgage | Angel Oak vs. MFA Financial | Angel Oak vs. Two Harbors Investments | Angel Oak vs. PennyMac Mortgage Investment |
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 Stocks Directory module to find actively traded stocks across global markets.
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