Correlation Between Angel Oak and Large Company
Can any of the company-specific risk be diversified away by investing in both Angel Oak and Large Company 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 Large Company 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 Large Pany Value, you can compare the effects of market volatilities on Angel Oak and Large Company 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 Large Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and Large Company.
Diversification Opportunities for Angel Oak and Large Company
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Angel and Large is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Financial and Large Pany Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Pany Value 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 Large Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Pany Value has no effect on the direction of Angel Oak i.e., Angel Oak and Large Company go up and down completely randomly.
Pair Corralation between Angel Oak and Large Company
Assuming the 90 days horizon Angel Oak is expected to generate 9.13 times less return on investment than Large Company. But when comparing it to its historical volatility, Angel Oak Financial is 3.38 times less risky than Large Company. It trades about 0.05 of its potential returns per unit of risk. Large Pany Value is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,846 in Large Pany Value on September 4, 2024 and sell it today you would earn a total of 564.00 from holding Large Pany Value or generate 30.55% 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. Large Pany Value
Performance |
| Timeline |
| Angel Oak Financial |
| Large Pany Value |
Angel Oak and Large Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Angel Oak and Large Company
The main advantage of trading using opposite Angel Oak and Large Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Angel Oak position performs unexpectedly, Large Company 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 Large Company will offset losses from the drop in Large Company'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 |
| Large Company vs. Wilshire Income Opport | Large Company vs. Wilshire Income Opport | Large Company vs. Wilshire 5000 Index | Large Company vs. Small Pany Growth |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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