Correlation Between Xtrackers USD and Angel Oak

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

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

Diversification Opportunities for Xtrackers USD and Angel Oak

0.62

Correlation Coefficient

Xtrackers USD  Angel Oak

Poor diversification

The 3 months correlation between Xtrackers and Angel is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers USD High and Angel Oak High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angel Oak High and Xtrackers USD 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 Xtrackers USD High 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 High has no effect on the direction of Xtrackers USD i.e., Xtrackers USD and Angel Oak go up and down completely randomly.

Pair Corralation between Xtrackers USD and Angel Oak

Given the investment horizon of 90 days Xtrackers USD High is expected to generate 1.21 times more return on investment than Angel Oak. However, Xtrackers USD is 1.21 times more volatile than Angel Oak High. It trades about -0.09 of its potential returns per unit of risk. Angel Oak High is currently generating about -0.13 per unit of risk. If you would invest  3,642  in Xtrackers USD High on October 10, 2024 and sell it today you would lose (23.00) from holding Xtrackers USD High or give up 0.63% of portfolio value over 90 days.

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

Xtrackers USD High  vs.  Angel Oak High

Xtrackers USD High

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers USD High are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Xtrackers USD is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Angel Oak High

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak High are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical 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 Xtrackers USD and Angel Oak

The main advantage of trading using opposite Xtrackers USD and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers USD 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 Xtrackers USD High and Angel Oak High 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.