Correlation Between Angel Oak and Materials Portfolio

Can any of the company-specific risk be diversified away by investing in both Angel Oak and Materials Portfolio 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 Materials Portfolio 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 Materials Portfolio Fidelity, you can compare the effects of market volatilities on Angel Oak and Materials Portfolio 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 Materials Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and Materials Portfolio.

Diversification Opportunities for Angel Oak and Materials Portfolio

-0.02

Correlation Coefficient

Angel Oak  Materials Portfolio

Good diversification

The 3 months correlation between Angel and Materials is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Financial and Materials Portfolio Fidelity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materials Portfolio 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 Materials Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materials Portfolio has no effect on the direction of Angel Oak i.e., Angel Oak and Materials Portfolio go up and down completely randomly.

Pair Corralation between Angel Oak and Materials Portfolio

Assuming the 90 days horizon Angel Oak Financial is expected to generate 0.2 times more return on investment than Materials Portfolio. However, Angel Oak Financial is 4.9 times less risky than Materials Portfolio. It trades about -0.03 of its potential returns per unit of risk. Materials Portfolio Fidelity is currently generating about -0.01 per unit of risk. If you would invest  1,463  in Angel Oak Financial on October 4, 2024 and sell it today you would lose (56.00) from holding Angel Oak Financial or give up 3.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Angel Oak Financial  vs.  Materials Portfolio Fidelity

Angel Oak Financial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak Financial are ranked lower than 3 (%) 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.

Materials Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Materials Portfolio Fidelity 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Angel Oak and Materials Portfolio

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

The idea behind Angel Oak Financial and Materials Portfolio Fidelity 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.