Correlation Between Chicago Atlantic and Angel Oak

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

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

Diversification Opportunities for Chicago Atlantic and Angel Oak

0.52

Correlation Coefficient

Chicago Atlantic  Angel Oak

Very weak diversification

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

Pair Corralation between Chicago Atlantic and Angel Oak

Given the investment horizon of 90 days Chicago Atlantic Real is expected to generate 0.6 times more return on investment than Angel Oak. However, Chicago Atlantic Real is 1.68 times less risky than Angel Oak. It trades about 0.25 of its potential returns per unit of risk. Angel Oak Mortgage is currently generating about 0.02 per unit of risk. If you would invest  1,521  in Chicago Atlantic Real on December 4, 2024 and sell it today you would earn a total of  84.00  from holding Chicago Atlantic Real or generate 5.52% return on investment over 90 days.

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

Chicago Atlantic Real  vs.  Angel Oak Mortgage

Chicago Atlantic Real

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chicago Atlantic Real are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Chicago Atlantic is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Angel Oak Mortgage

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak Mortgage are ranked lower than 6 (%) 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 Chicago Atlantic and Angel Oak

The main advantage of trading using opposite Chicago Atlantic and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chicago Atlantic 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 Chicago Atlantic Real 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.