Correlation Between IShares TIPS and Angel Oak

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

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

Diversification Opportunities for IShares TIPS and Angel Oak

-0.05

Correlation Coefficient

IShares TIPS  Angel Oak

Good diversification

The 3 months correlation between IShares and Angel is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding iShares TIPS Bond 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 IShares TIPS 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 iShares TIPS Bond 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 IShares TIPS i.e., IShares TIPS and Angel Oak go up and down completely randomly.

Pair Corralation between IShares TIPS and Angel Oak

Considering the 90-day investment horizon iShares TIPS Bond is expected to under-perform the Angel Oak. In addition to that, IShares TIPS is 1.29 times more volatile than Angel Oak Funds. It trades about -0.07 of its total potential returns per unit of risk. Angel Oak Funds is currently generating about 0.13 per unit of volatility. If you would invest  1,097  in Angel Oak Funds on September 12, 2024 and sell it today you would earn a total of  18.00  from holding Angel Oak Funds or generate 1.64% return on investment over 90 days.

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

iShares TIPS Bond  vs.  Angel Oak Funds

iShares TIPS Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares TIPS Bond has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, IShares TIPS is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares TIPS and Angel Oak

The main advantage of trading using opposite IShares TIPS and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares TIPS 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 iShares TIPS Bond 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.