Correlation Between Angel Oak and American Beacon
Can any of the company-specific risk be diversified away by investing in both Angel Oak and American Beacon 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 American Beacon 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 American Beacon Shapiro, you can compare the effects of market volatilities on Angel Oak and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and American Beacon.
Diversification Opportunities for Angel Oak and American Beacon
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Angel and American is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Financial and American Beacon Shapiro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Shapiro 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Shapiro has no effect on the direction of Angel Oak i.e., Angel Oak and American Beacon go up and down completely randomly.
Pair Corralation between Angel Oak and American Beacon
Assuming the 90 days horizon Angel Oak is expected to generate 8.87 times less return on investment than American Beacon. But when comparing it to its historical volatility, Angel Oak Financial is 4.24 times less risky than American Beacon. It trades about 0.14 of its potential returns per unit of risk. American Beacon Shapiro is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,105 in American Beacon Shapiro on September 3, 2024 and sell it today you would earn a total of 64.00 from holding American Beacon Shapiro or generate 5.79% 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. American Beacon Shapiro
Performance |
| Timeline |
| Angel Oak Financial |
| American Beacon Shapiro |
Angel Oak and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Angel Oak and American Beacon
The main advantage of trading using opposite Angel Oak and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Angel Oak position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon'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 |
| American Beacon vs. Angel Oak Financial | American Beacon vs. Goldman Sachs Financial | American Beacon vs. Blackrock Financial Institutions | American Beacon vs. Icon Financial Fund |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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