Correlation Between Chicago Atlantic and Power REIT

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

By analyzing existing cross correlation between Chicago Atlantic Real and Power REIT, you can compare the effects of market volatilities on Chicago Atlantic and Power REIT 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 Power REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chicago Atlantic and Power REIT.

Diversification Opportunities for Chicago Atlantic and Power REIT

0.35

Correlation Coefficient

Chicago Atlantic  Power REIT

Weak diversification

The 3 months correlation between Chicago and Power is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Chicago Atlantic Real and Power REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power REIT 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 Real are associated (or correlated) with Power REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power REIT has no effect on the direction of Chicago Atlantic i.e., Chicago Atlantic and Power REIT go up and down completely randomly.

Pair Corralation between Chicago Atlantic and Power REIT

Given the investment horizon of 90 days Chicago Atlantic Real is expected to generate 0.12 times more return on investment than Power REIT. However, Chicago Atlantic Real is 8.69 times less risky than Power REIT. It trades about 0.03 of its potential returns per unit of risk. Power REIT is currently generating about -0.35 per unit of risk. If you would invest  1,555  in Chicago Atlantic Real on October 6, 2024 and sell it today you would earn a total of  6.00  from holding Chicago Atlantic Real or generate 0.39% return on investment over 90 days.

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

Chicago Atlantic Real  vs.  Power REIT

Chicago Atlantic Real

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chicago Atlantic Real are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Chicago Atlantic is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Power REIT

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Power REIT are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Power REIT showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chicago Atlantic and Power REIT

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

The idea behind Chicago Atlantic Real and Power REIT 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.