Historically, ‘Å’ was an ‘A’ with an additional ‘a’ on top. This has evolved into becoming the ‘°’. Similarly, ‘Ä’ was an ‘A’ with an ‘e’ on top, which evolved into becoming two dots.
Interestingly, these umlauts are treated as extra characters in the Nordics but in German they aren’t. That’s why Swedish dictionaries are sorted from ‘A-Ö’ while German ones are ‘A-Z’. So in order to find German Ärger or Swedish ängen, you need to look at different spots in the dictionary (‘Ä’ -> ‘Ae’ (1st letter of the German alphabet) vs. ‘Ä’ (28th letter of the Swedish alphabet).