Correlation Between Chicago Atlantic and Vantage Drilling

Can any of the company-specific risk be diversified away by investing in both Chicago Atlantic and Vantage Drilling 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 Vantage Drilling 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 Vantage Drilling International, you can compare the effects of market volatilities on Chicago Atlantic and Vantage Drilling 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 Vantage Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chicago Atlantic and Vantage Drilling.

Diversification Opportunities for Chicago Atlantic and Vantage Drilling

0.17

Correlation Coefficient

Chicago Atlantic  Vantage Drilling

Average diversification

The 3 months correlation between Chicago and Vantage is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Chicago Atlantic BDC, and Vantage Drilling International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vantage Drilling Int 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 Vantage Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vantage Drilling Int has no effect on the direction of Chicago Atlantic i.e., Chicago Atlantic and Vantage Drilling go up and down completely randomly.

Pair Corralation between Chicago Atlantic and Vantage Drilling

Given the investment horizon of 90 days Chicago Atlantic BDC, is expected to generate 0.31 times more return on investment than Vantage Drilling. However, Chicago Atlantic BDC, is 3.2 times less risky than Vantage Drilling. It trades about -0.04 of its potential returns per unit of risk. Vantage Drilling International is currently generating about -0.13 per unit of risk. If you would invest  1,228  in Chicago Atlantic BDC, on December 22, 2024 and sell it today you would lose (74.00) from holding Chicago Atlantic BDC, or give up 6.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Chicago Atlantic BDC,  vs.  Vantage Drilling International

Chicago Atlantic BDC,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chicago Atlantic BDC, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Chicago Atlantic is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Vantage Drilling Int

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vantage Drilling International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Chicago Atlantic and Vantage Drilling

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

The idea behind Chicago Atlantic BDC, and Vantage Drilling International 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.