Correlation Between Fidelity Small and Angel Oak

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

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

Diversification Opportunities for Fidelity Small and Angel Oak

0.76

Correlation Coefficient

Fidelity Small  Angel Oak

Poor diversification

The 3 months correlation between Fidelity and Angel is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap 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 Fidelity Small 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 Fidelity Small Cap 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 Fidelity Small i.e., Fidelity Small and Angel Oak go up and down completely randomly.

Pair Corralation between Fidelity Small and Angel Oak

Assuming the 90 days horizon Fidelity Small Cap is expected to generate 5.49 times more return on investment than Angel Oak. However, Fidelity Small is 5.49 times more volatile than Angel Oak Financial. It trades about 0.05 of its potential returns per unit of risk. Angel Oak Financial is currently generating about -0.03 per unit of risk. If you would invest  2,077  in Fidelity Small Cap on September 16, 2024 and sell it today you would earn a total of  651.00  from holding Fidelity Small Cap or generate 31.34% return on investment over 90 days.

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

Fidelity Small Cap  vs.  Angel Oak Financial

Fidelity Small Cap

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Small Cap are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Small 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

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak Financial are ranked lower than 8 (%) 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 Fidelity Small and Angel Oak

The main advantage of trading using opposite Fidelity Small and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small 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 Fidelity Small Cap 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.