Correlation Between Angel Oak and Ab Tax

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

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

Diversification Opportunities for Angel Oak and Ab Tax

0.35

Correlation Coefficient

Angel Oak  Ab Tax

Weak diversification

The 3 months correlation between Angel and TAFI is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Ultrashort and Ab Tax Aware Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Tax Aware and Angel Oak 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 Angel Oak Ultrashort are associated (or correlated) with Ab Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Tax Aware has no effect on the direction of Angel Oak i.e., Angel Oak and Ab Tax go up and down completely randomly.

Pair Corralation between Angel Oak and Ab Tax

Given the investment horizon of 90 days Angel Oak Ultrashort is expected to generate 0.29 times more return on investment than Ab Tax. However, Angel Oak Ultrashort is 3.44 times less risky than Ab Tax. It trades about 0.42 of its potential returns per unit of risk. Ab Tax Aware Short is currently generating about 0.04 per unit of risk. If you would invest  5,061  in Angel Oak Ultrashort on September 14, 2024 and sell it today you would earn a total of  56.00  from holding Angel Oak Ultrashort or generate 1.11% return on investment over 90 days.

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

Angel Oak Ultrashort  vs.  Ab Tax Aware Short

Angel Oak Ultrashort

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak Ultrashort are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Angel Oak is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Ab Tax Aware

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Tax Aware Short are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Ab Tax is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Angel Oak and Ab Tax

The main advantage of trading using opposite Angel Oak and Ab Tax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Angel Oak position performs unexpectedly, Ab Tax 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 Ab Tax will offset losses from the drop in Ab Tax's long position.

The idea behind Angel Oak Ultrashort and Ab Tax Aware Short 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.