Correlation Between SPDR SP and Angel Oak

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

By analyzing existing cross correlation between SPDR SP 500 and Angel Oak High, you can compare the effects of market volatilities on SPDR SP 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 SPDR SP with a short position of Angel Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Angel Oak.

Diversification Opportunities for SPDR SP and Angel Oak

0.75

Correlation Coefficient

SPDR SP  Angel Oak

Poor diversification

The 3 months correlation between SPDR and Angel is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 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 SPDR SP 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 SPDR SP 500 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 SPDR SP i.e., SPDR SP and Angel Oak go up and down completely randomly.

Pair Corralation between SPDR SP and Angel Oak

Considering the 90-day investment horizon SPDR SP 500 is expected to generate 3.89 times more return on investment than Angel Oak. However, SPDR SP is 3.89 times more volatile than Angel Oak High. It trades about 0.11 of its potential returns per unit of risk. Angel Oak High is currently generating about 0.16 per unit of risk. If you would invest  38,501  in SPDR SP 500 on October 11, 2024 and sell it today you would earn a total of  20,448  from holding SPDR SP 500 or generate 53.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	45.25%
Values	Daily Returns

SPDR SP 500  vs.  Angel Oak High

SPDR SP 500

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP 500 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, SPDR SP 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

1 of 100

Weak

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

The main advantage of trading using opposite SPDR SP and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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 SPDR SP 500 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.