Correlation Between US Treasury and Angel Oak
Can any of the company-specific risk be diversified away by investing in both US Treasury 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 US Treasury and Angel Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Treasury 12 and Angel Oak Ultrashort, you can compare the effects of market volatilities on US Treasury 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 US Treasury with a short position of Angel Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Treasury and Angel Oak.
Diversification Opportunities for US Treasury and Angel Oak
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between OBIL and Angel is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding US Treasury 12 and Angel Oak Ultrashort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angel Oak Ultrashort and US Treasury 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 US Treasury 12 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 Ultrashort has no effect on the direction of US Treasury i.e., US Treasury and Angel Oak go up and down completely randomly.
Pair Corralation between US Treasury and Angel Oak
Given the investment horizon of 90 days US Treasury is expected to generate 1.31 times less return on investment than Angel Oak. But when comparing it to its historical volatility, US Treasury 12 is 1.25 times less risky than Angel Oak. It trades about 0.43 of its potential returns per unit of risk. Angel Oak Ultrashort is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 4,946 in Angel Oak Ultrashort on September 1, 2024 and sell it today you would earn a total of 182.00 from holding Angel Oak Ultrashort or generate 3.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
US Treasury 12 vs. Angel Oak Ultrashort
Performance |
| Timeline |
| US Treasury 12 |
| Angel Oak Ultrashort |
US Treasury and Angel Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Treasury and Angel Oak
The main advantage of trading using opposite US Treasury and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Treasury 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.| US Treasury vs. SPDR Barclays Long | US Treasury vs. SPDR Portfolio Intermediate | US Treasury vs. SPDR Barclays Short | US Treasury vs. SPDR Barclays Intermediate |
| Angel Oak vs. iShares Interest Rate | Angel Oak vs. iShares Interest Rate | Angel Oak vs. iShares Edge Investment | Angel Oak vs. iShares Inflation Hedged |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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