Correlation Between Angel Oak and Technology Munications

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

Diversification Opportunities for Angel Oak and Technology Munications

0.76

Correlation Coefficient

Angel Oak  Technology Munications

Poor diversification

The 3 months correlation between Angel and Technology is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Ultrashort and Technology Munications Portfol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology Munications 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 Technology Munications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology Munications has no effect on the direction of Angel Oak i.e., Angel Oak and Technology Munications go up and down completely randomly.

Pair Corralation between Angel Oak and Technology Munications

Assuming the 90 days horizon Angel Oak Ultrashort is expected to generate 0.06 times more return on investment than Technology Munications. However, Angel Oak Ultrashort is 16.97 times less risky than Technology Munications. It trades about 0.14 of its potential returns per unit of risk. Technology Munications Portfolio is currently generating about 0.0 per unit of risk. If you would invest  976.00  in Angel Oak Ultrashort on September 12, 2024 and sell it today you would earn a total of  8.00  from holding Angel Oak Ultrashort or generate 0.82% return on investment over 90 days.

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

Angel Oak Ultrashort  vs.  Technology Munications Portfol

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.

Technology Munications

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Technology Munications Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Technology Munications 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 Technology Munications

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

The idea behind Angel Oak Ultrashort and Technology Munications Portfolio 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.