Correlation Between Chicago Atlantic and Whiting Petroleum

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

Diversification Opportunities for Chicago Atlantic and Whiting Petroleum

-0.44

Correlation Coefficient

Chicago Atlantic  Whiting Petroleum

Very good diversification

The 3 months correlation between Chicago and Whiting is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Chicago Atlantic Real and Whiting Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whiting Petroleum 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 Whiting Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whiting Petroleum has no effect on the direction of Chicago Atlantic i.e., Chicago Atlantic and Whiting Petroleum go up and down completely randomly.

Pair Corralation between Chicago Atlantic and Whiting Petroleum

Given the investment horizon of 90 days Chicago Atlantic is expected to generate 17.94 times less return on investment than Whiting Petroleum. But when comparing it to its historical volatility, Chicago Atlantic Real is 14.36 times less risky than Whiting Petroleum. It trades about 0.01 of its potential returns per unit of risk. Whiting Petroleum is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  280.00  in Whiting Petroleum on December 21, 2024 and sell it today you would lose (100.00) from holding Whiting Petroleum or give up 35.71% of portfolio value over 90 days.

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

Chicago Atlantic Real  vs.  Whiting Petroleum

Chicago Atlantic Real

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chicago Atlantic Real has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Whiting Petroleum

Risk-Adjusted Performance

Weak

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

Pair Trading with Chicago Atlantic and Whiting Petroleum

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

The idea behind Chicago Atlantic Real and Whiting Petroleum 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.