Correlation Between Angel Oak and Amer Beacon

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

Diversification Opportunities for Angel Oak and Amer Beacon

0.25

Correlation Coefficient

Angel Oak  Amer Beacon

Modest diversification

The 3 months correlation between Angel and Amer is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Financial and Amer Beacon Garcia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amer Beacon Garcia 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 Amer Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amer Beacon Garcia has no effect on the direction of Angel Oak i.e., Angel Oak and Amer Beacon go up and down completely randomly.

Pair Corralation between Angel Oak and Amer Beacon

Assuming the 90 days horizon Angel Oak is expected to generate 10.96 times less return on investment than Amer Beacon. But when comparing it to its historical volatility, Angel Oak Financial is 1.81 times less risky than Amer Beacon. It trades about 0.02 of its potential returns per unit of risk. Amer Beacon Garcia is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  833.00  in Amer Beacon Garcia on December 19, 2024 and sell it today you would earn a total of  28.00  from holding Amer Beacon Garcia or generate 3.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Angel Oak Financial  vs.  Amer Beacon Garcia

Angel Oak Financial

Risk-Adjusted Performance

Weak

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

Amer Beacon Garcia

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amer Beacon Garcia are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Amer Beacon 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 Amer Beacon

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

The idea behind Angel Oak Financial and Amer Beacon Garcia 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.