Correlation Between Angel Oak and Timothy Plan

Can any of the company-specific risk be diversified away by investing in both Angel Oak and Timothy Plan 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 Timothy Plan 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 Timothy Plan Small, you can compare the effects of market volatilities on Angel Oak and Timothy Plan 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 Timothy Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and Timothy Plan.

Diversification Opportunities for Angel Oak and Timothy Plan

0.81

Correlation Coefficient

Angel Oak  Timothy Plan

Very poor diversification

The 3 months correlation between Angel and Timothy is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Ultrashort and Timothy Plan Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan 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 Timothy Plan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Plan Small has no effect on the direction of Angel Oak i.e., Angel Oak and Timothy Plan go up and down completely randomly.

Pair Corralation between Angel Oak and Timothy Plan

Given the investment horizon of 90 days Angel Oak is expected to generate 9.47 times less return on investment than Timothy Plan. But when comparing it to its historical volatility, Angel Oak Ultrashort is 29.76 times less risky than Timothy Plan. It trades about 0.5 of its potential returns per unit of risk. Timothy Plan Small is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,770  in Timothy Plan Small on September 3, 2024 and sell it today you would earn a total of  481.00  from holding Timothy Plan Small or generate 12.76% return on investment over 90 days.

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

Angel Oak Ultrashort  vs.  Timothy Plan Small

Angel Oak Ultrashort

Risk-Adjusted Performance

39 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak Ultrashort are ranked lower than 39 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Angel Oak is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Timothy Plan Small

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Plan Small are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Timothy Plan may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Angel Oak and Timothy Plan

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

The idea behind Angel Oak Ultrashort and Timothy Plan 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.