Correlation Between Granite Point and Angel Oak

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

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

Diversification Opportunities for Granite Point and Angel Oak

-0.19

Correlation Coefficient

Granite Point  Angel Oak

Good diversification

The 3 months correlation between Granite and Angel is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Granite Point Mortgage and Angel Oak Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angel Oak Mortgage and Granite Point 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 Granite Point Mortgage 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 Mortgage has no effect on the direction of Granite Point i.e., Granite Point and Angel Oak go up and down completely randomly.

Pair Corralation between Granite Point and Angel Oak

Given the investment horizon of 90 days Granite Point Mortgage is expected to generate 2.25 times more return on investment than Angel Oak. However, Granite Point is 2.25 times more volatile than Angel Oak Mortgage. It trades about 0.15 of its potential returns per unit of risk. Angel Oak Mortgage is currently generating about -0.08 per unit of risk. If you would invest  262.00  in Granite Point Mortgage on September 12, 2024 and sell it today you would earn a total of  81.00  from holding Granite Point Mortgage or generate 30.92% return on investment over 90 days.

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

Granite Point Mortgage  vs.  Angel Oak Mortgage

Granite Point Mortgage

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Granite Point Mortgage are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, Granite Point unveiled solid returns over the last few months and may actually be approaching a breakup point.

Angel Oak Mortgage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Angel Oak Mortgage has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's primary indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Granite Point and Angel Oak

The main advantage of trading using opposite Granite Point and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Point 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 Granite Point Mortgage and Angel Oak Mortgage 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.