Correlation Between Chimera Investment and Angel Oak

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

By analyzing existing cross correlation between Chimera Investment and Angel Oak Mortgage, you can compare the effects of market volatilities on Chimera Investment and Angel Oak 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 Chimera Investment with a short position of Angel Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chimera Investment and Angel Oak.

Diversification Opportunities for Chimera Investment and Angel Oak

0.1

Correlation Coefficient

Chimera Investment  Angel Oak

Average diversification

The 3 months correlation between Chimera and Angel is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Chimera Investment and Angel Oak Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angel Oak Mortgage and Chimera Investment 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 Chimera Investment are associated (or correlated) with Angel Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Angel Oak Mortgage has no effect on the direction of Chimera Investment i.e., Chimera Investment and Angel Oak go up and down completely randomly.

Pair Corralation between Chimera Investment and Angel Oak

Considering the 90-day investment horizon Chimera Investment is expected to generate 0.94 times more return on investment than Angel Oak. However, Chimera Investment is 1.06 times less risky than Angel Oak. It trades about 0.0 of its potential returns per unit of risk. Angel Oak Mortgage is currently generating about -0.1 per unit of risk. If you would invest  1,502  in Chimera Investment on August 31, 2024 and sell it today you would lose (3.00) from holding Chimera Investment or give up 0.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Chimera Investment  vs.  Angel Oak Mortgage

Chimera Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chimera Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Chimera Investment is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Angel Oak Mortgage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Angel Oak Mortgage has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's primary indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Chimera Investment and Angel Oak

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

The idea behind Chimera Investment and Angel Oak Mortgage 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.