Correlation Between Angel Oak and Smallcap Growth
Can any of the company-specific risk be diversified away by investing in both Angel Oak and Smallcap Growth 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 Smallcap Growth 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 Smallcap Growth Fund, you can compare the effects of market volatilities on Angel Oak and Smallcap Growth 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 Smallcap Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and Smallcap Growth.
Diversification Opportunities for Angel Oak and Smallcap Growth
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Angel and Smallcap is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Financial and Smallcap Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap Growth 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 Smallcap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap Growth has no effect on the direction of Angel Oak i.e., Angel Oak and Smallcap Growth go up and down completely randomly.
Pair Corralation between Angel Oak and Smallcap Growth
Assuming the 90 days horizon Angel Oak is expected to generate 12.56 times less return on investment than Smallcap Growth. But when comparing it to its historical volatility, Angel Oak Financial is 6.41 times less risky than Smallcap Growth. It trades about 0.14 of its potential returns per unit of risk. Smallcap Growth Fund is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,593 in Smallcap Growth Fund on September 5, 2024 and sell it today you would earn a total of 137.00 from holding Smallcap Growth Fund or generate 8.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Angel Oak Financial vs. Smallcap Growth Fund
Performance |
| Timeline |
| Angel Oak Financial |
| Smallcap Growth |
Angel Oak and Smallcap Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Angel Oak and Smallcap Growth
The main advantage of trading using opposite Angel Oak and Smallcap Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Angel Oak position performs unexpectedly, Smallcap Growth 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 Smallcap Growth will offset losses from the drop in Smallcap Growth'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 |
| Smallcap Growth vs. Ab Impact Municipal | Smallcap Growth vs. Angel Oak Financial | Smallcap Growth vs. Maryland Tax Free Bond | Smallcap Growth vs. Versatile Bond Portfolio |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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