Correlation Between Angel Oak and Buffalo International

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

By analyzing existing cross correlation between Angel Oak Financial and Buffalo International, you can compare the effects of market volatilities on Angel Oak and Buffalo International 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 Buffalo International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and Buffalo International.

Diversification Opportunities for Angel Oak and Buffalo International

-0.54

Correlation Coefficient

Angel Oak  Buffalo International

Excellent diversification

The 3 months correlation between Angel and Buffalo is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Financial and Buffalo International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buffalo International 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 Financial are associated (or correlated) with Buffalo International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buffalo International has no effect on the direction of Angel Oak i.e., Angel Oak and Buffalo International go up and down completely randomly.

Pair Corralation between Angel Oak and Buffalo International

Assuming the 90 days horizon Angel Oak is expected to generate 2.12 times less return on investment than Buffalo International. But when comparing it to its historical volatility, Angel Oak Financial is 3.82 times less risky than Buffalo International. It trades about 0.07 of its potential returns per unit of risk. Buffalo International is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,026  in Buffalo International on September 4, 2024 and sell it today you would earn a total of  142.00  from holding Buffalo International or generate 7.01% return on investment over 90 days.

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

Angel Oak Financial  vs.  Buffalo International

Angel Oak Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak Financial are ranked lower than 10 (%) 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.

Buffalo International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Buffalo International has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Buffalo International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Angel Oak and Buffalo International

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

The idea behind Angel Oak Financial and Buffalo International 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.