Correlation Between ETRACS 2xMonthly and Angel Oak

Can any of the company-specific risk be diversified away by investing in both ETRACS 2xMonthly 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 ETRACS 2xMonthly and Angel Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ETRACS 2xMonthly Pay and Angel Oak UltraShort, you can compare the effects of market volatilities on ETRACS 2xMonthly 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 ETRACS 2xMonthly with a short position of Angel Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS 2xMonthly and Angel Oak.

Diversification Opportunities for ETRACS 2xMonthly and Angel Oak

0.64

Correlation Coefficient

ETRACS 2xMonthly  Angel Oak

Poor diversification

The 3 months correlation between ETRACS and Angel is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS 2xMonthly Pay and Angel Oak UltraShort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angel Oak UltraShort and ETRACS 2xMonthly 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 ETRACS 2xMonthly Pay 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 UltraShort has no effect on the direction of ETRACS 2xMonthly i.e., ETRACS 2xMonthly and Angel Oak go up and down completely randomly.

Pair Corralation between ETRACS 2xMonthly and Angel Oak

Given the investment horizon of 90 days ETRACS 2xMonthly Pay is expected to generate 28.86 times more return on investment than Angel Oak. However, ETRACS 2xMonthly is 28.86 times more volatile than Angel Oak UltraShort. It trades about 0.1 of its potential returns per unit of risk. Angel Oak UltraShort is currently generating about 0.54 per unit of risk. If you would invest  806.00  in ETRACS 2xMonthly Pay on May 7, 2025 and sell it today you would earn a total of  62.00  from holding ETRACS 2xMonthly Pay or generate 7.69% return on investment over 90 days.

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

ETRACS 2xMonthly Pay  vs.  Angel Oak UltraShort

ETRACS 2xMonthly Pay

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in ETRACS 2xMonthly Pay are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, ETRACS 2xMonthly may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Angel Oak UltraShort

Risk-Adjusted Performance

Prime

Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak UltraShort are ranked lower than 42 (%) 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.

Pair Trading with ETRACS 2xMonthly and Angel Oak

The main advantage of trading using opposite ETRACS 2xMonthly and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS 2xMonthly 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 ETRACS 2xMonthly Pay and Angel Oak UltraShort 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.