Correlation Between Angel Oak and Hennessy Large

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

Diversification Opportunities for Angel Oak and Hennessy Large

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Angel and Hennessy is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Financial and Hennessy Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Large Cap 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 Hennessy Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Large Cap has no effect on the direction of Angel Oak i.e., Angel Oak and Hennessy Large go up and down completely randomly.

Pair Corralation between Angel Oak and Hennessy Large

Assuming the 90 days horizon Angel Oak Financial is expected to under-perform the Hennessy Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, Angel Oak Financial is 4.32 times less risky than Hennessy Large. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Hennessy Large Cap is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,416  in Hennessy Large Cap on March 12, 2024 and sell it today you would earn a total of  53.00  from holding Hennessy Large Cap or generate 2.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Angel Oak Financial  vs.  Hennessy Large Cap

 Performance 
       Timeline  
Angel Oak Financial 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Angel Oak Financial has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Angel Oak is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Hennessy Large Cap 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Large Cap are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Hennessy Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Angel Oak and Hennessy Large Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Angel Oak and Hennessy Large

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

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