Correlation Between Real Estate and Angel Oak
Can any of the company-specific risk be diversified away by investing in both Real Estate 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 Real Estate and Angel Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Real Estate Securities and Angel Oak Financial, you can compare the effects of market volatilities on Real Estate 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 Real Estate with a short position of Angel Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Estate and Angel Oak.
Diversification Opportunities for Real Estate and Angel Oak
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Real and Angel is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Real Estate Securities 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 Real Estate 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 Real Estate Securities 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 Real Estate i.e., Real Estate and Angel Oak go up and down completely randomly.
Pair Corralation between Real Estate and Angel Oak
Assuming the 90 days horizon Real Estate Securities is expected to under-perform the Angel Oak. In addition to that, Real Estate is 2.98 times more volatile than Angel Oak Financial. It trades about -0.03 of its total potential returns per unit of risk. Angel Oak Financial is currently generating about 0.09 per unit of volatility. If you would invest 1,408 in Angel Oak Financial on September 14, 2024 and sell it today you would earn a total of 6.00 from holding Angel Oak Financial or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Real Estate Securities vs. Angel Oak Financial
Performance |
| Timeline |
| Real Estate Securities |
| Angel Oak Financial |
Real Estate and Angel Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Real Estate and Angel Oak
The main advantage of trading using opposite Real Estate and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Real Estate 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.| Real Estate vs. Elfun Government Money | Real Estate vs. Dreyfus Government Cash | Real Estate vs. Virtus Seix Government | Real Estate vs. Us Government Securities |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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