Correlation Between Angel Oak and California Tax
Can any of the company-specific risk be diversified away by investing in both Angel Oak and California Tax 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 California Tax 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 California Tax Free Fund, you can compare the effects of market volatilities on Angel Oak and California Tax 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 California Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and California Tax.
Diversification Opportunities for Angel Oak and California Tax
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Angel and California is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Financial and California Tax Free Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Tax Free 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 California Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Tax Free has no effect on the direction of Angel Oak i.e., Angel Oak and California Tax go up and down completely randomly.
Pair Corralation between Angel Oak and California Tax
Assuming the 90 days horizon Angel Oak is expected to generate 2.2 times less return on investment than California Tax. In addition to that, Angel Oak is 1.87 times more volatile than California Tax Free Fund. It trades about 0.11 of its total potential returns per unit of risk. California Tax Free Fund is currently generating about 0.44 per unit of volatility. If you would invest 1,083 in California Tax Free Fund on September 12, 2024 and sell it today you would earn a total of 12.00 from holding California Tax Free Fund or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Angel Oak Financial vs. California Tax Free Fund
Performance |
| Timeline |
| Angel Oak Financial |
| California Tax Free |
Angel Oak and California Tax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Angel Oak and California Tax
The main advantage of trading using opposite Angel Oak and California Tax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Angel Oak position performs unexpectedly, California Tax 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 California Tax will offset losses from the drop in California Tax's long position.| Angel Oak vs. Huber Capital Diversified | Angel Oak vs. Western Asset Diversified | Angel Oak vs. Sentinel Small Pany | Angel Oak vs. Blackrock Sm Cap |
| California Tax vs. Angel Oak Financial | California Tax vs. Mesirow Financial Small | California Tax vs. Royce Global Financial | California Tax vs. Blackrock Financial Institutions |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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