Correlation Between Visa and Angel Oak

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

Diversification Opportunities for Visa and Angel Oak

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Visa and Angel is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and Angel Oak go up and down completely randomly.

Pair Corralation between Visa and Angel Oak

Taking into account the 90-day investment horizon Visa Class A is expected to generate 29.13 times more return on investment than Angel Oak. However, Visa is 29.13 times more volatile than Angel Oak Ultrashort. It trades about 0.27 of its potential returns per unit of risk. Angel Oak Ultrashort is currently generating about 0.33 per unit of risk. If you would invest  28,424  in Visa Class A on August 23, 2024 and sell it today you would earn a total of  2,315  from holding Visa Class A or generate 8.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.65%
ValuesDaily Returns

Visa Class A  vs.  Angel Oak Ultrashort

 Performance 
       Timeline  
Visa Class A 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.
Angel Oak Ultrashort 

Risk-Adjusted Performance

34 of 100

 
Weak
 
Strong
Very Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak Ultrashort are ranked lower than 34 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Angel Oak is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Visa and Angel Oak Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Visa and Angel Oak

The main advantage of trading using opposite Visa and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.
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The idea behind Visa Class A and Angel Oak Ultrashort 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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