Correlation Between Angel Oak and Chimera Investment

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

By analyzing existing cross correlation between Angel Oak Mortgage and Chimera Investment, you can compare the effects of market volatilities on Angel Oak and Chimera Investment 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 Chimera Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and Chimera Investment.

Diversification Opportunities for Angel Oak and Chimera Investment

0.29

Correlation Coefficient

Angel Oak  Chimera Investment

Modest diversification

The 3 months correlation between Angel and Chimera is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Mortgage and Chimera Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chimera Investment 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 Mortgage are associated (or correlated) with Chimera Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chimera Investment has no effect on the direction of Angel Oak i.e., Angel Oak and Chimera Investment go up and down completely randomly.

Pair Corralation between Angel Oak and Chimera Investment

Given the investment horizon of 90 days Angel Oak Mortgage is expected to generate 0.85 times more return on investment than Chimera Investment. However, Angel Oak Mortgage is 1.18 times less risky than Chimera Investment. It trades about 0.03 of its potential returns per unit of risk. Chimera Investment is currently generating about -0.09 per unit of risk. If you would invest  990.00  in Angel Oak Mortgage on December 2, 2024 and sell it today you would earn a total of  7.00  from holding Angel Oak Mortgage or generate 0.71% 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 Mortgage  vs.  Chimera Investment

Angel Oak Mortgage

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak Mortgage are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable primary indicators, Angel Oak is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Chimera Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chimera Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Chimera Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Angel Oak and Chimera Investment

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

The idea behind Angel Oak Mortgage and Chimera Investment 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.