Correlation Between Angel Oak and Amg Gwk
Can any of the company-specific risk be diversified away by investing in both Angel Oak and Amg Gwk 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 Amg Gwk 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 Amg Gwk E, you can compare the effects of market volatilities on Angel Oak and Amg Gwk 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 Amg Gwk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and Amg Gwk.
Diversification Opportunities for Angel Oak and Amg Gwk
Poor diversification
The 3 months correlation between Angel and Amg is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Financial and Amg Gwk E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Gwk E 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 Amg Gwk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Gwk E has no effect on the direction of Angel Oak i.e., Angel Oak and Amg Gwk go up and down completely randomly.
Pair Corralation between Angel Oak and Amg Gwk
Assuming the 90 days horizon Angel Oak Financial is expected to generate 0.61 times more return on investment than Amg Gwk. However, Angel Oak Financial is 1.64 times less risky than Amg Gwk. It trades about 0.04 of its potential returns per unit of risk. Amg Gwk E is currently generating about -0.06 per unit of risk. If you would invest 1,395 in Angel Oak Financial on November 20, 2024 and sell it today you would earn a total of 11.00 from holding Angel Oak Financial or generate 0.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Angel Oak Financial vs. Amg Gwk E
Performance |
Timeline |
Angel Oak Financial |
Amg Gwk E |
Angel Oak and Amg Gwk Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Angel Oak and Amg Gwk
The main advantage of trading using opposite Angel Oak and Amg Gwk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Angel Oak position performs unexpectedly, Amg Gwk 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 Amg Gwk will offset losses from the drop in Amg Gwk's long position.Angel Oak vs. Legg Mason Partners | ||
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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 Stocks Directory module to find actively traded stocks across global markets.
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