Correlation Between Angel Oak and Nexpoint Real

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

Diversification Opportunities for Angel Oak and Nexpoint Real

0.2

Correlation Coefficient

Angel Oak  Nexpoint Real

Modest diversification

The 3 months correlation between Angel and Nexpoint is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Mortgage and Nexpoint Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexpoint Real Estate 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 Nexpoint Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexpoint Real Estate has no effect on the direction of Angel Oak i.e., Angel Oak and Nexpoint Real go up and down completely randomly.

Pair Corralation between Angel Oak and Nexpoint Real

Given the investment horizon of 90 days Angel Oak Mortgage is expected to generate 1.07 times more return on investment than Nexpoint Real. However, Angel Oak is 1.07 times more volatile than Nexpoint Real Estate. It trades about 0.09 of its potential returns per unit of risk. Nexpoint Real Estate is currently generating about 0.04 per unit of risk. If you would invest  380.00  in Angel Oak Mortgage on September 15, 2024 and sell it today you would earn a total of  565.00  from holding Angel Oak Mortgage or generate 148.68% 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.  Nexpoint Real Estate

Angel Oak Mortgage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Angel Oak Mortgage has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Nexpoint Real Estate

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nexpoint Real Estate are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Nexpoint Real may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Angel Oak and Nexpoint Real

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

The idea behind Angel Oak Mortgage and Nexpoint Real Estate 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.