Correlation Between Angel Oak and Mid Cap

Can any of the company-specific risk be diversified away by investing in both Angel Oak and Mid Cap 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 Mid Cap 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 Mid Cap 15x Strategy, you can compare the effects of market volatilities on Angel Oak and Mid Cap 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 Mid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and Mid Cap.

Diversification Opportunities for Angel Oak and Mid Cap

-0.68

Correlation Coefficient

Angel Oak  Mid Cap

Excellent diversification

The 3 months correlation between Angel and Mid is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Multi Strategy and Mid Cap 15x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap 15x 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 Mid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap 15x has no effect on the direction of Angel Oak i.e., Angel Oak and Mid Cap go up and down completely randomly.

Pair Corralation between Angel Oak and Mid Cap

Assuming the 90 days horizon Angel Oak Multi Strategy is expected to generate 0.12 times more return on investment than Mid Cap. However, Angel Oak Multi Strategy is 8.39 times less risky than Mid Cap. It trades about 0.16 of its potential returns per unit of risk. Mid Cap 15x Strategy is currently generating about -0.08 per unit of risk. If you would invest  844.00  in Angel Oak Multi Strategy on December 20, 2024 and sell it today you would earn a total of  15.00  from holding Angel Oak Multi Strategy or generate 1.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Angel Oak Multi Strategy  vs.  Mid Cap 15x Strategy

Angel Oak Multi

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak Multi Strategy are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. 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.

Mid Cap 15x

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mid Cap 15x Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Angel Oak and Mid Cap

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

The idea behind Angel Oak Multi Strategy and Mid Cap 15x Strategy 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.