Correlation Between Chicago Atlantic and KKR Co

Can any of the company-specific risk be diversified away by investing in both Chicago Atlantic and KKR Co 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 Chicago Atlantic and KKR Co into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chicago Atlantic BDC, and KKR Co LP, you can compare the effects of market volatilities on Chicago Atlantic and KKR Co 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 Chicago Atlantic with a short position of KKR Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chicago Atlantic and KKR Co.

Diversification Opportunities for Chicago Atlantic and KKR Co

0.56

Correlation Coefficient

Chicago Atlantic  KKR Co

Very weak diversification

The 3 months correlation between Chicago and KKR is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Chicago Atlantic BDC, and KKR Co LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKR Co LP and Chicago Atlantic 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 Chicago Atlantic BDC, are associated (or correlated) with KKR Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKR Co LP has no effect on the direction of Chicago Atlantic i.e., Chicago Atlantic and KKR Co go up and down completely randomly.

Pair Corralation between Chicago Atlantic and KKR Co

Given the investment horizon of 90 days Chicago Atlantic is expected to generate 4.34 times less return on investment than KKR Co. But when comparing it to its historical volatility, Chicago Atlantic BDC, is 1.47 times less risky than KKR Co. It trades about 0.04 of its potential returns per unit of risk. KKR Co LP is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  10,717  in KKR Co LP on September 22, 2024 and sell it today you would earn a total of  4,041  from holding KKR Co LP or generate 37.71% return on investment over 90 days.

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

Chicago Atlantic BDC,  vs.  KKR Co LP

Chicago Atlantic BDC,

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chicago Atlantic BDC, are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Chicago Atlantic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

KKR Co LP

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KKR Co LP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile forward-looking signals, KKR Co may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Chicago Atlantic and KKR Co

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

The idea behind Chicago Atlantic BDC, and KKR Co LP 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.