Correlation Between Angel Oak and MFS High

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

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

Diversification Opportunities for Angel Oak and MFS High

0.66

Correlation Coefficient

Angel Oak  MFS High

Poor diversification

The 3 months correlation between Angel and MFS is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Financial and MFS High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS 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 Financial are associated (or correlated) with MFS High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS High Income has no effect on the direction of Angel Oak i.e., Angel Oak and MFS High go up and down completely randomly.

Pair Corralation between Angel Oak and MFS High

Given the investment horizon of 90 days Angel Oak Financial is expected to generate 0.73 times more return on investment than MFS High. However, Angel Oak Financial is 1.38 times less risky than MFS High. It trades about 0.22 of its potential returns per unit of risk. MFS High Income is currently generating about 0.06 per unit of risk. If you would invest  1,257  in Angel Oak Financial on December 27, 2024 and sell it today you would earn a total of  91.00  from holding Angel Oak Financial or generate 7.24% return on investment over 90 days.

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

Angel Oak Financial  vs.  MFS High Income

Angel Oak Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak Financial are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Angel Oak may actually be approaching a critical reversion point that can send shares even higher in April 2025.

MFS High Income

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MFS High Income are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, MFS High is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Angel Oak and MFS High

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

The idea behind Angel Oak Financial and MFS High Income 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.