Correlation Between Vanguard ESG and Angel Oak

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

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

Diversification Opportunities for Vanguard ESG and Angel Oak

0.33

Correlation Coefficient

Vanguard ESG  Angel Oak

Weak diversification

The 3 months correlation between Vanguard and Angel is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard ESG Corporate 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 Vanguard ESG 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 Vanguard ESG Corporate 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 Vanguard ESG i.e., Vanguard ESG and Angel Oak go up and down completely randomly.

Pair Corralation between Vanguard ESG and Angel Oak

Given the investment horizon of 90 days Vanguard ESG is expected to generate 2.57 times less return on investment than Angel Oak. In addition to that, Vanguard ESG is 2.0 times more volatile than Angel Oak High. It trades about 0.03 of its total potential returns per unit of risk. Angel Oak High is currently generating about 0.16 per unit of volatility. If you would invest  1,024  in Angel Oak High on October 11, 2024 and sell it today you would earn a total of  79.00  from holding Angel Oak High or generate 7.71% return on investment over 90 days.

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

Vanguard ESG Corporate  vs.  Angel Oak High

Vanguard ESG Corporate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard ESG Corporate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Vanguard ESG is not utilizing all of its potentials. The current 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 Vanguard ESG and Angel Oak

The main advantage of trading using opposite Vanguard ESG and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard ESG 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 Vanguard ESG Corporate 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.