Correlation Between Angel Oak and Snow Capital

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

Diversification Opportunities for Angel Oak and Snow Capital

0.12

Correlation Coefficient

Angel Oak  Snow Capital

Average diversification

The 3 months correlation between Angel and Snow is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Financial and Snow Capital Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snow Capital Opportunity 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 Snow Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snow Capital Opportunity has no effect on the direction of Angel Oak i.e., Angel Oak and Snow Capital go up and down completely randomly.

Pair Corralation between Angel Oak and Snow Capital

Assuming the 90 days horizon Angel Oak Financial is expected to under-perform the Snow Capital. But the mutual fund apears to be less risky and, when comparing its historical volatility, Angel Oak Financial is 3.54 times less risky than Snow Capital. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Snow Capital Opportunity is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,144  in Snow Capital Opportunity on October 5, 2024 and sell it today you would earn a total of  114.00  from holding Snow Capital Opportunity or generate 3.63% return on investment over 90 days.

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

Angel Oak Financial  vs.  Snow Capital Opportunity

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.

Snow Capital Opportunity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Snow Capital Opportunity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Snow Capital 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 Snow Capital

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

The idea behind Angel Oak Financial and Snow Capital Opportunity 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.