Correlation Between Small Cap and Angel Oak
Can any of the company-specific risk be diversified away by investing in both Small Cap 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 Small Cap and Angel Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Stock and Angel Oak Ultrashort, you can compare the effects of market volatilities on Small Cap 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 Small Cap with a short position of Angel Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Angel Oak.
Diversification Opportunities for Small Cap and Angel Oak
Poor diversification
The 3 months correlation between Small and Angel is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock 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 Small Cap 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 Small Cap Stock 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 Small Cap i.e., Small Cap and Angel Oak go up and down completely randomly.
Pair Corralation between Small Cap and Angel Oak
Assuming the 90 days horizon Small Cap Stock is expected to generate 32.45 times more return on investment than Angel Oak. However, Small Cap is 32.45 times more volatile than Angel Oak Ultrashort. It trades about 0.28 of its potential returns per unit of risk. Angel Oak Ultrashort is currently generating about 0.09 per unit of risk. If you would invest 1,391 in Small Cap Stock on September 2, 2024 and sell it today you would earn a total of 138.00 from holding Small Cap Stock or generate 9.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Stock vs. Angel Oak Ultrashort
Performance |
| Timeline |
| Small Cap Stock |
| Angel Oak Ultrashort |
Small Cap and Angel Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Angel Oak
The main advantage of trading using opposite Small Cap and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap 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.| Small Cap vs. Calamos Global Equity | Small Cap vs. Cutler Equity | Small Cap vs. Us Vector Equity | Small Cap vs. Small Cap Equity |
| Angel Oak vs. Health Biotchnology Portfolio | Angel Oak vs. Blackrock Health Sciences | Angel Oak vs. Highland Longshort Healthcare | Angel Oak vs. Allianzgi Health Sciences |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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