Correlation Between Chicago Atlantic and VeriSign

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

Diversification Opportunities for Chicago Atlantic and VeriSign

0.67

Correlation Coefficient

Chicago Atlantic  VeriSign

Poor diversification

The 3 months correlation between Chicago and VeriSign is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Chicago Atlantic Real and VeriSign in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VeriSign 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 VeriSign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VeriSign has no effect on the direction of Chicago Atlantic i.e., Chicago Atlantic and VeriSign go up and down completely randomly.

Pair Corralation between Chicago Atlantic and VeriSign

Given the investment horizon of 90 days Chicago Atlantic is expected to generate 2.08 times less return on investment than VeriSign. But when comparing it to its historical volatility, Chicago Atlantic Real is 1.4 times less risky than VeriSign. It trades about 0.2 of its potential returns per unit of risk. VeriSign is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  19,996  in VeriSign on October 24, 2024 and sell it today you would earn a total of  1,046  from holding VeriSign or generate 5.23% return on investment over 90 days.

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

Chicago Atlantic Real  vs.  VeriSign

Chicago Atlantic Real

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chicago Atlantic Real are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, Chicago Atlantic may actually be approaching a critical reversion point that can send shares even higher in February 2025.

VeriSign

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VeriSign are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, VeriSign displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chicago Atlantic and VeriSign

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

The idea behind Chicago Atlantic Real and VeriSign 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.