Correlation Between Angel Oak and Massmutual Select

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

Diversification Opportunities for Angel Oak and Massmutual Select

0.74

Correlation Coefficient

Angel Oak  Massmutual Select

Poor diversification

The 3 months correlation between Angel and Massmutual is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Ultrashort and Massmutual Select Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select Mid 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 Massmutual Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massmutual Select Mid has no effect on the direction of Angel Oak i.e., Angel Oak and Massmutual Select go up and down completely randomly.

Pair Corralation between Angel Oak and Massmutual Select

Assuming the 90 days horizon Angel Oak is expected to generate 12.97 times less return on investment than Massmutual Select. But when comparing it to its historical volatility, Angel Oak Ultrashort is 8.45 times less risky than Massmutual Select. It trades about 0.14 of its potential returns per unit of risk. Massmutual Select Mid is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,105  in Massmutual Select Mid on September 5, 2024 and sell it today you would earn a total of  235.00  from holding Massmutual Select Mid or generate 11.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Angel Oak Ultrashort  vs.  Massmutual Select Mid

Angel Oak Ultrashort

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak Ultrashort are ranked lower than 10 (%) 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.

Massmutual Select Mid

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Massmutual Select Mid are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Massmutual Select may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Angel Oak and Massmutual Select

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

The idea behind Angel Oak Ultrashort and Massmutual Select Mid 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.