Correlation Between Angel Oak and Voya Emerging

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

Diversification Opportunities for Angel Oak and Voya Emerging

-0.13

Correlation Coefficient

Angel Oak  Voya Emerging

Good diversification

The 3 months correlation between Angel and Voya is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Financial and Voya Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Emerging Markets 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 Voya Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Emerging Markets has no effect on the direction of Angel Oak i.e., Angel Oak and Voya Emerging go up and down completely randomly.

Pair Corralation between Angel Oak and Voya Emerging

Assuming the 90 days horizon Angel Oak Financial is expected to under-perform the Voya Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, Angel Oak Financial is 3.96 times less risky than Voya Emerging. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Voya Emerging Markets is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  922.00  in Voya Emerging Markets on October 10, 2024 and sell it today you would earn a total of  74.00  from holding Voya Emerging Markets or generate 8.03% return on investment over 90 days.

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

Angel Oak Financial  vs.  Voya Emerging Markets

Angel Oak Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak Financial are ranked lower than 4 (%) 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.

Voya Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Angel Oak and Voya Emerging

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

The idea behind Angel Oak Financial and Voya Emerging Markets 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.