Correlation Between Angel Oak and American High

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

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

Diversification Opportunities for Angel Oak and American High

0.73

Correlation Coefficient

Angel Oak  American High

Poor diversification

The 3 months correlation between Angel and American is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Ultrashort and American High Income Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American High Income 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 Ultrashort are associated (or correlated) with American High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American High Income has no effect on the direction of Angel Oak i.e., Angel Oak and American High go up and down completely randomly.

Pair Corralation between Angel Oak and American High

Assuming the 90 days horizon Angel Oak Ultrashort is expected to generate 0.38 times more return on investment than American High. However, Angel Oak Ultrashort is 2.6 times less risky than American High. It trades about 0.24 of its potential returns per unit of risk. American High Income Municipal is currently generating about 0.01 per unit of risk. If you would invest  970.00  in Angel Oak Ultrashort on December 28, 2024 and sell it today you would earn a total of  14.00  from holding Angel Oak Ultrashort or generate 1.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Angel Oak Ultrashort  vs.  American High Income Municipal

Angel Oak Ultrashort

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak Ultrashort are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Angel Oak is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

American High Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days American High Income Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, American High 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 American High

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

The idea behind Angel Oak Ultrashort and American High Income Municipal 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.