Correlation Between Angel Oak and Fidelity Advisor

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

Diversification Opportunities for Angel Oak and Fidelity Advisor

0.19

Correlation Coefficient

Angel Oak  Fidelity Advisor

Average diversification

The 3 months correlation between Angel and Fidelity is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Ultrashort and Fidelity Advisor Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Str 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 Fidelity Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Str has no effect on the direction of Angel Oak i.e., Angel Oak and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Angel Oak and Fidelity Advisor

Assuming the 90 days horizon Angel Oak is expected to generate 1.16 times less return on investment than Fidelity Advisor. But when comparing it to its historical volatility, Angel Oak Ultrashort is 2.59 times less risky than Fidelity Advisor. It trades about 0.23 of its potential returns per unit of risk. Fidelity Advisor Strategic is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,015  in Fidelity Advisor Strategic on October 23, 2024 and sell it today you would earn a total of  150.00  from holding Fidelity Advisor Strategic or generate 14.78% return on investment over 90 days.

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

Angel Oak Ultrashort  vs.  Fidelity Advisor Strategic

Angel Oak Ultrashort

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak Ultrashort are ranked lower than 15 (%) 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.

Fidelity Advisor Str

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Strategic are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Fidelity Advisor 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 Fidelity Advisor

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

The idea behind Angel Oak Ultrashort and Fidelity Advisor Strategic 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.