Correlation Between Angel Oak and Northern Short-intermedia

Can any of the company-specific risk be diversified away by investing in both Angel Oak and Northern Short-intermedia 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 Northern Short-intermedia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Angel Oak Multi Strategy and Northern Short Intermediate Government, you can compare the effects of market volatilities on Angel Oak and Northern Short-intermedia 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 Northern Short-intermedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and Northern Short-intermedia.

Diversification Opportunities for Angel Oak and Northern Short-intermedia

0.36

Correlation Coefficient

Angel Oak  Northern Short-intermedia

Weak diversification

The 3 months correlation between Angel and Northern is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Multi Strategy and Northern Short Intermediate Go in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Short-intermedia 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 Multi Strategy are associated (or correlated) with Northern Short-intermedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Short-intermedia has no effect on the direction of Angel Oak i.e., Angel Oak and Northern Short-intermedia go up and down completely randomly.

Pair Corralation between Angel Oak and Northern Short-intermedia

Assuming the 90 days horizon Angel Oak Multi Strategy is expected to generate 0.96 times more return on investment than Northern Short-intermedia. However, Angel Oak Multi Strategy is 1.04 times less risky than Northern Short-intermedia. It trades about 0.09 of its potential returns per unit of risk. Northern Short Intermediate Government is currently generating about 0.06 per unit of risk. If you would invest  776.00  in Angel Oak Multi Strategy on October 15, 2024 and sell it today you would earn a total of  72.00  from holding Angel Oak Multi Strategy or generate 9.28% 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 Multi Strategy  vs.  Northern Short Intermediate Go

Angel Oak Multi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Angel Oak Multi Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Angel Oak is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Northern Short-intermedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northern Short Intermediate Government has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Northern Short-intermedia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Angel Oak and Northern Short-intermedia

The main advantage of trading using opposite Angel Oak and Northern Short-intermedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Angel Oak position performs unexpectedly, Northern Short-intermedia 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 Northern Short-intermedia will offset losses from the drop in Northern Short-intermedia's long position.

The idea behind Angel Oak Multi Strategy and Northern Short Intermediate Government pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.