Correlation Between MicroSectors FANG and Angel Oak

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

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

Diversification Opportunities for MicroSectors FANG and Angel Oak

-0.7

Correlation Coefficient

MicroSectors FANG  Angel Oak

Excellent diversification

The 3 months correlation between MicroSectors and Angel is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and Angel Oak Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angel Oak Funds and MicroSectors FANG 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 MicroSectors FANG Index 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 Funds has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and Angel Oak go up and down completely randomly.

Pair Corralation between MicroSectors FANG and Angel Oak

Given the investment horizon of 90 days MicroSectors FANG Index is expected to under-perform the Angel Oak. In addition to that, MicroSectors FANG is 19.82 times more volatile than Angel Oak Funds. It trades about -0.17 of its total potential returns per unit of risk. Angel Oak Funds is currently generating about 0.14 per unit of volatility. If you would invest  1,093  in Angel Oak Funds on September 2, 2024 and sell it today you would earn a total of  19.00  from holding Angel Oak Funds or generate 1.74% return on investment over 90 days.

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

MicroSectors FANG Index  vs.  Angel Oak Funds

MicroSectors FANG Index

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MicroSectors FANG Index has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Angel Oak Funds

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak Funds are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, Angel Oak is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MicroSectors FANG and Angel Oak

The main advantage of trading using opposite MicroSectors FANG and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG 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 MicroSectors FANG Index and Angel Oak Funds 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.