Correlation Between Municipal Bond and Angel Oak
Can any of the company-specific risk be diversified away by investing in both Municipal Bond 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 Municipal Bond and Angel Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Municipal Bond Fund and Angel Oak Multi Strategy, you can compare the effects of market volatilities on Municipal Bond 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 Municipal Bond with a short position of Angel Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Municipal Bond and Angel Oak.
Diversification Opportunities for Municipal Bond and Angel Oak
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Municipal and Angel is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Municipal Bond Fund and Angel Oak Multi Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angel Oak Multi and Municipal Bond 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 Municipal Bond Fund 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 Multi has no effect on the direction of Municipal Bond i.e., Municipal Bond and Angel Oak go up and down completely randomly.
Pair Corralation between Municipal Bond and Angel Oak
Assuming the 90 days horizon Municipal Bond Fund is expected to generate 1.94 times more return on investment than Angel Oak. However, Municipal Bond is 1.94 times more volatile than Angel Oak Multi Strategy. It trades about -0.02 of its potential returns per unit of risk. Angel Oak Multi Strategy is currently generating about -0.19 per unit of risk. If you would invest 987.00 in Municipal Bond Fund on August 30, 2024 and sell it today you would lose (2.00) from holding Municipal Bond Fund or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Municipal Bond Fund vs. Angel Oak Multi Strategy
Performance |
| Timeline |
| Municipal Bond |
| Angel Oak Multi |
Municipal Bond and Angel Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Municipal Bond and Angel Oak
The main advantage of trading using opposite Municipal Bond and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Municipal Bond 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.| Municipal Bond vs. Angel Oak Multi Strategy | Municipal Bond vs. Legg Mason Partners | Municipal Bond vs. Rbc Emerging Markets | Municipal Bond vs. T Rowe Price |
| Angel Oak vs. Doubleline Income Solutions | Angel Oak vs. Angel Oak Ultrashort | Angel Oak vs. Angel Oak Ultrashort | Angel Oak vs. Angel Oak Ultrashort |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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