Correlation Between MFA Financial and Angel Oak

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

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

Diversification Opportunities for MFA Financial and Angel Oak

0.52

Correlation Coefficient

MFA Financial  Angel Oak

Very weak diversification

The 3 months correlation between MFA and Angel is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding MFA Financial 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 MFA Financial 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 MFA Financial 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 MFA Financial i.e., MFA Financial and Angel Oak go up and down completely randomly.

Pair Corralation between MFA Financial and Angel Oak

Considering the 90-day investment horizon MFA Financial is expected to generate 0.89 times more return on investment than Angel Oak. However, MFA Financial is 1.13 times less risky than Angel Oak. It trades about 0.09 of its potential returns per unit of risk. Angel Oak Mortgage is currently generating about 0.07 per unit of risk. If you would invest  1,016  in MFA Financial on December 26, 2024 and sell it today you would earn a total of  78.00  from holding MFA Financial or generate 7.68% return on investment over 90 days.

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

MFA Financial  vs.  Angel Oak Mortgage

MFA Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MFA Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, MFA Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Angel Oak Mortgage

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak Mortgage are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain primary indicators, Angel Oak may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with MFA Financial and Angel Oak

The main advantage of trading using opposite MFA Financial and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFA Financial 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 MFA Financial 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.