Correlation Between Angel Oak and State Street
Can any of the company-specific risk be diversified away by investing in both Angel Oak and State Street 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 State Street 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 State Street Hedged, you can compare the effects of market volatilities on Angel Oak and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and State Street.
Diversification Opportunities for Angel Oak and State Street
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Angel and State is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Financial and State Street Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Hedged 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Hedged has no effect on the direction of Angel Oak i.e., Angel Oak and State Street go up and down completely randomly.
Pair Corralation between Angel Oak and State Street
Assuming the 90 days horizon Angel Oak is expected to generate 2.23 times less return on investment than State Street. But when comparing it to its historical volatility, Angel Oak Financial is 2.47 times less risky than State Street. It trades about 0.11 of its potential returns per unit of risk. State Street Hedged is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 12,449 in State Street Hedged on September 12, 2024 and sell it today you would earn a total of 136.00 from holding State Street Hedged or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Angel Oak Financial vs. State Street Hedged
Performance |
| Timeline |
| Angel Oak Financial |
| State Street Hedged |
Angel Oak and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Angel Oak and State Street
The main advantage of trading using opposite Angel Oak and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Angel Oak position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street'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 |
| State Street vs. Ab Impact Municipal | State Street vs. T Rowe Price | State Street vs. California High Yield Municipal | State Street vs. Franklin High Yield |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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