Correlation Between Core Plus and Angel Oak

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

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

Diversification Opportunities for Core Plus and Angel Oak

-0.53

Correlation Coefficient

Core Plus  Angel Oak

Excellent diversification

The 3 months correlation between Core and Angel is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Core Plus Bond 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 Core Plus 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 Core Plus Bond 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 Core Plus i.e., Core Plus and Angel Oak go up and down completely randomly.

Pair Corralation between Core Plus and Angel Oak

Assuming the 90 days horizon Core Plus Bond is expected to generate 1.81 times more return on investment than Angel Oak. However, Core Plus is 1.81 times more volatile than Angel Oak Financial. It trades about 0.01 of its potential returns per unit of risk. Angel Oak Financial is currently generating about -0.04 per unit of risk. If you would invest  895.00  in Core Plus Bond on October 11, 2024 and sell it today you would earn a total of  21.00  from holding Core Plus Bond or generate 2.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.34%
Values	Daily Returns

Core Plus Bond  vs.  Angel Oak Financial

Core Plus Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Core Plus Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Core Plus 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

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak Financial are ranked lower than 3 (%) 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 Core Plus and Angel Oak

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