Correlation Between Blackrock and Angel Oak

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

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

Diversification Opportunities for Blackrock and Angel Oak

0.76

Correlation Coefficient

Blackrock  Angel Oak

Poor diversification

The 3 months correlation between Blackrock and Angel is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Sm Cap and Angel Oak Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angel Oak Financial and Blackrock 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 Blackrock Sm Cap 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 Financial has no effect on the direction of Blackrock i.e., Blackrock and Angel Oak go up and down completely randomly.

Pair Corralation between Blackrock and Angel Oak

Assuming the 90 days horizon Blackrock Sm Cap is expected to generate 6.53 times more return on investment than Angel Oak. However, Blackrock is 6.53 times more volatile than Angel Oak Financial. It trades about 0.13 of its potential returns per unit of risk. Angel Oak Financial is currently generating about 0.09 per unit of risk. If you would invest  2,478  in Blackrock Sm Cap on September 13, 2024 and sell it today you would earn a total of  247.00  from holding Blackrock Sm Cap or generate 9.97% return on investment over 90 days.

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

Blackrock Sm Cap  vs.  Angel Oak Financial

Blackrock Sm Cap

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Sm Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Blackrock may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Angel Oak Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak Financial are ranked lower than 7 (%) 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.

Pair Trading with Blackrock and Angel Oak

The main advantage of trading using opposite Blackrock and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock 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 Blackrock Sm Cap and Angel Oak Financial 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.