Correlation Between Angel Oak and Icon Equity
Can any of the company-specific risk be diversified away by investing in both Angel Oak and Icon Equity 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 Icon Equity 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 Icon Equity Income, you can compare the effects of market volatilities on Angel Oak and Icon Equity 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 Icon Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and Icon Equity.
Diversification Opportunities for Angel Oak and Icon Equity
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Angel and Icon is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Financial and Icon Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Equity Income 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 Icon Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Equity Income has no effect on the direction of Angel Oak i.e., Angel Oak and Icon Equity go up and down completely randomly.
Pair Corralation between Angel Oak and Icon Equity
Assuming the 90 days horizon Angel Oak is expected to generate 4.14 times less return on investment than Icon Equity. But when comparing it to its historical volatility, Angel Oak Financial is 2.87 times less risky than Icon Equity. It trades about 0.07 of its potential returns per unit of risk. Icon Equity Income is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,492 in Icon Equity Income on September 4, 2024 and sell it today you would earn a total of 231.00 from holding Icon Equity Income or generate 15.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Angel Oak Financial vs. Icon Equity Income
Performance |
| Timeline |
| Angel Oak Financial |
| Icon Equity Income |
Angel Oak and Icon Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Angel Oak and Icon Equity
The main advantage of trading using opposite Angel Oak and Icon Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Angel Oak position performs unexpectedly, Icon Equity 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 Icon Equity will offset losses from the drop in Icon Equity'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 |
| Icon Equity vs. Icon Bond Fund | Icon Equity vs. Icon Longshort Fund | Icon Equity vs. Icon Natural Resources | Icon Equity vs. Icon Natural Resources |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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