Correlation Between The Bond and Angel Oak

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

By analyzing existing cross correlation between The Bond Fund and Angel Oak Financial, you can compare the effects of market volatilities on The Bond and Angel Oak 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 The Bond with a short position of Angel Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Bond and Angel Oak.

Diversification Opportunities for The Bond and Angel Oak

0.2

Correlation Coefficient

The Bond  Angel Oak

Modest diversification

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

Pair Corralation between The Bond and Angel Oak

Assuming the 90 days horizon The Bond Fund is expected to under-perform the Angel Oak. In addition to that, The Bond is 1.26 times more volatile than Angel Oak Financial. It trades about -0.46 of its total potential returns per unit of risk. Angel Oak Financial is currently generating about -0.11 per unit of volatility. If you would invest  1,415  in Angel Oak Financial on October 8, 2024 and sell it today you would lose (6.00) from holding Angel Oak Financial or give up 0.42% of portfolio value over 90 days.

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

The Bond Fund  vs.  Angel Oak Financial

Bond Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, The Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Angel Oak Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak Financial are ranked lower than 5 (%) 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.

Pair Trading with The Bond and Angel Oak

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

The idea behind The Bond Fund and Angel Oak Financial 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.