Correlation Between Angel Oak and Select Equity
Can any of the company-specific risk be diversified away by investing in both Angel Oak and Select 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 Select 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 Select Equity Fund, you can compare the effects of market volatilities on Angel Oak and Select 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 Select Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and Select Equity.
Diversification Opportunities for Angel Oak and Select Equity
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Angel and Select is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Financial and Select Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Equity 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 Select Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Equity has no effect on the direction of Angel Oak i.e., Angel Oak and Select Equity go up and down completely randomly.
Pair Corralation between Angel Oak and Select Equity
Assuming the 90 days horizon Angel Oak Financial is expected to under-perform the Select Equity. But the mutual fund apears to be less risky and, when comparing its historical volatility, Angel Oak Financial is 3.38 times less risky than Select Equity. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Select Equity Fund is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,366 in Select Equity Fund on September 3, 2024 and sell it today you would earn a total of 706.00 from holding Select Equity Fund or generate 51.68% 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. Select Equity Fund
Performance |
| Timeline |
| Angel Oak Financial |
| Select Equity |
Angel Oak and Select Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Angel Oak and Select Equity
The main advantage of trading using opposite Angel Oak and Select Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Angel Oak position performs unexpectedly, Select 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 Select Equity will offset losses from the drop in Select Equity's long position.| Angel Oak vs. Omni Small Cap Value | Angel Oak vs. T Rowe Price | Angel Oak vs. Commonwealth Global Fund | Angel Oak vs. Nasdaq 100 Fund Class |
| Select Equity vs. Angel Oak Financial | Select Equity vs. Bbh Intermediate Municipal | Select Equity vs. Artisan High Income | Select Equity vs. Dreyfusstandish Global Fixed |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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