Correlation Between Angel Oak and Heritage Fund
Can any of the company-specific risk be diversified away by investing in both Angel Oak and Heritage Fund 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 Angel Oak and Heritage Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Angel Oak Financial and Heritage Fund A, you can compare the effects of market volatilities on Angel Oak and Heritage Fund 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 Angel Oak with a short position of Heritage Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and Heritage Fund.
Diversification Opportunities for Angel Oak and Heritage Fund
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Angel and Heritage is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Financial and Heritage Fund A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Fund A and Angel Oak 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 Angel Oak Financial are associated (or correlated) with Heritage Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Fund A has no effect on the direction of Angel Oak i.e., Angel Oak and Heritage Fund go up and down completely randomly.
Pair Corralation between Angel Oak and Heritage Fund
Assuming the 90 days horizon Angel Oak is expected to generate 12.74 times less return on investment than Heritage Fund. But when comparing it to its historical volatility, Angel Oak Financial is 5.23 times less risky than Heritage Fund. It trades about 0.06 of its potential returns per unit of risk. Heritage Fund A is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,990 in Heritage Fund A on September 1, 2024 and sell it today you would earn a total of 459.00 from holding Heritage Fund A or generate 23.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Angel Oak Financial vs. Heritage Fund A
Performance |
| Timeline |
| Angel Oak Financial |
| Heritage Fund A |
Angel Oak and Heritage Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Angel Oak and Heritage Fund
The main advantage of trading using opposite Angel Oak and Heritage Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Angel Oak position performs unexpectedly, Heritage Fund 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 Heritage Fund will offset losses from the drop in Heritage Fund's long position.| Angel Oak vs. Vanguard Total Stock | Angel Oak vs. Vanguard 500 Index | Angel Oak vs. Vanguard Total Stock | Angel Oak vs. Vanguard Total Stock |
| Heritage Fund vs. Growth Fund Investor | Heritage Fund vs. Select Fund Investor | Heritage Fund vs. Emerging Markets Fund | Heritage Fund vs. Ultra Fund Investor |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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