Correlation Between Angel Oak and Small Capitalization
Can any of the company-specific risk be diversified away by investing in both Angel Oak and Small Capitalization 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 Small Capitalization 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 Small Capitalization Portfolio, you can compare the effects of market volatilities on Angel Oak and Small Capitalization 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 Small Capitalization. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and Small Capitalization.
Diversification Opportunities for Angel Oak and Small Capitalization
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Angel and Small is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Financial and Small Capitalization Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Capitalization 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 Small Capitalization. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Capitalization has no effect on the direction of Angel Oak i.e., Angel Oak and Small Capitalization go up and down completely randomly.
Pair Corralation between Angel Oak and Small Capitalization
Assuming the 90 days horizon Angel Oak is expected to generate 8.36 times less return on investment than Small Capitalization. But when comparing it to its historical volatility, Angel Oak Financial is 4.79 times less risky than Small Capitalization. It trades about 0.1 of its potential returns per unit of risk. Small Capitalization Portfolio is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 671.00 in Small Capitalization Portfolio on June 3, 2025 and sell it today you would earn a total of 76.00 from holding Small Capitalization Portfolio or generate 11.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Angel Oak Financial vs. Small Capitalization Portfolio
Performance |
| Timeline |
| Angel Oak Financial |
| Small Capitalization |
Angel Oak and Small Capitalization Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Angel Oak and Small Capitalization
The main advantage of trading using opposite Angel Oak and Small Capitalization positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Angel Oak position performs unexpectedly, Small Capitalization 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 Small Capitalization will offset losses from the drop in Small Capitalization's long position.| Angel Oak vs. Shelton Emerging Markets | Angel Oak vs. Growth Strategy Fund | Angel Oak vs. Pace International Emerging | Angel Oak vs. Franklin Emerging Market |
| Small Capitalization vs. L Abbett Growth | Small Capitalization vs. Growth Fund C | Small Capitalization vs. T Rowe Price | Small Capitalization vs. Guidemark Large Cap |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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