Correlation Between Angel Oak and Huber Capital

Can any of the company-specific risk be diversified away by investing in both Angel Oak and Huber 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 Huber Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Angel Oak Ultrashort and Huber Capital Small, you can compare the effects of market volatilities on Angel Oak and Huber 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 Huber Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and Huber Capital.

Diversification Opportunities for Angel Oak and Huber Capital

0.65

Correlation Coefficient

Angel Oak  Huber Capital

Poor diversification

The 3 months correlation between Angel and Huber is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Ultrashort and Huber Capital Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huber Capital Small 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 Ultrashort are associated (or correlated) with Huber Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huber Capital Small has no effect on the direction of Angel Oak i.e., Angel Oak and Huber Capital go up and down completely randomly.

Pair Corralation between Angel Oak and Huber Capital

Assuming the 90 days horizon Angel Oak Ultrashort is not expected to generate positive returns. However, Angel Oak Ultrashort is 19.24 times less risky than Huber Capital. It waists most of its returns potential to compensate for thr risk taken. Huber Capital is generating about 0.05 per unit of risk. If you would invest  2,759  in Huber Capital Small on October 1, 2024 and sell it today you would earn a total of  96.00  from holding Huber Capital Small or generate 3.48% return on investment over 90 days.

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

Angel Oak Ultrashort  vs.  Huber Capital Small

Angel Oak Ultrashort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Angel Oak Ultrashort has generated negative risk-adjusted returns adding no value to fund investors. 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.

Huber Capital Small

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Huber Capital Small are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Huber 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 Huber Capital

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

The idea behind Angel Oak Ultrashort and Huber Capital Small 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.