Correlation Between Angel Oak and Equity Residential

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Can any of the company-specific risk be diversified away by investing in both Angel Oak and Equity Residential 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 Equity Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Angel Oak Mortgage and Equity Residential, you can compare the effects of market volatilities on Angel Oak and Equity Residential 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 Equity Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and Equity Residential.

Diversification Opportunities for Angel Oak and Equity Residential

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Angel and Equity is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Mortgage and Equity Residential in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Residential 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 Mortgage are associated (or correlated) with Equity Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Residential has no effect on the direction of Angel Oak i.e., Angel Oak and Equity Residential go up and down completely randomly.

Pair Corralation between Angel Oak and Equity Residential

Given the investment horizon of 90 days Angel Oak Mortgage is expected to under-perform the Equity Residential. In addition to that, Angel Oak is 1.9 times more volatile than Equity Residential. It trades about -0.14 of its total potential returns per unit of risk. Equity Residential is currently generating about -0.25 per unit of volatility. If you would invest  7,492  in Equity Residential on July 6, 2022 and sell it today you would lose (644.00)  from holding Equity Residential or give up 8.6% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Angel Oak Mortgage  vs.  Equity Residential

 Performance (%) 
       Timeline  
Angel Oak Mortgage 
Angel Performance
0 of 100
Over the last 90 days Angel Oak Mortgage has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Angel Oak is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Angel Price Channel

Equity Residential 
Equity Performance
0 of 100
Over the last 90 days Equity Residential has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Equity Residential is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Equity Price Channel

Angel Oak and Equity Residential Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Angel Oak and Equity Residential

The main advantage of trading using opposite Angel Oak and Equity Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Angel Oak position performs unexpectedly, Equity Residential 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 Equity Residential will offset losses from the drop in Equity Residential's long position.
Angel Oak vs. Amazon Inc
The idea behind Angel Oak Mortgage and Equity Residential 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.
Equity Residential vs. Amazon Inc
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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