Correlation Between Angel Oak and Ab New

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

By analyzing existing cross correlation between Angel Oak Financial and Ab New Jersey, you can compare the effects of market volatilities on Angel Oak and Ab New 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 New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and Ab New.

Diversification Opportunities for Angel Oak and Ab New

0.36

Correlation Coefficient

Angel Oak  Ab New

Weak diversification

The 3 months correlation between Angel and ANJCX is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Financial and Ab New Jersey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab New Jersey 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 Financial are associated (or correlated) with Ab New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab New Jersey has no effect on the direction of Angel Oak i.e., Angel Oak and Ab New go up and down completely randomly.

Pair Corralation between Angel Oak and Ab New

Assuming the 90 days horizon Angel Oak Financial is expected to generate 0.77 times more return on investment than Ab New. However, Angel Oak Financial is 1.29 times less risky than Ab New. It trades about -0.11 of its potential returns per unit of risk. Ab New Jersey is currently generating about -0.33 per unit of risk. If you would invest  1,415  in Angel Oak Financial on October 7, 2024 and sell it today you would lose (6.00) from holding Angel Oak Financial or give up 0.42% of portfolio value over 90 days.

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

Angel Oak Financial  vs.  Ab New Jersey

Angel Oak Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak Financial are ranked lower than 5 (%) 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.

Ab New Jersey

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab New Jersey has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Ab New is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Angel Oak and Ab New

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

The idea behind Angel Oak Financial and Ab New Jersey 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.