Correlation Between Sentinel Small and Angel Oak

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

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

Diversification Opportunities for Sentinel Small and Angel Oak

0.35

Correlation Coefficient

Sentinel Small  Angel Oak

Weak diversification

The 3 months correlation between Sentinel and Angel is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Small Pany 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 Sentinel Small 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 Sentinel Small Pany 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 Sentinel Small i.e., Sentinel Small and Angel Oak go up and down completely randomly.

Pair Corralation between Sentinel Small and Angel Oak

Assuming the 90 days horizon Sentinel Small Pany is expected to under-perform the Angel Oak. In addition to that, Sentinel Small is 5.23 times more volatile than Angel Oak Financial. It trades about -0.36 of its total potential returns per unit of risk. Angel Oak Financial is currently generating about 0.04 per unit of volatility. If you would invest  1,411  in Angel Oak Financial on December 2, 2024 and sell it today you would earn a total of  2.00  from holding Angel Oak Financial or generate 0.14% return on investment over 90 days.

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

Sentinel Small Pany  vs.  Angel Oak Financial

Sentinel Small Pany

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sentinel Small Pany has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Angel Oak Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak Financial are ranked lower than 1 (%) 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 Sentinel Small and Angel Oak

The main advantage of trading using opposite Sentinel Small and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentinel Small 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 Sentinel Small Pany 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.