Correlation Between Tesla and Chicago Atlantic

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

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

Diversification Opportunities for Tesla and Chicago Atlantic

0.8

Correlation Coefficient

Tesla  Chicago Atlantic

Very poor diversification

The 3 months correlation between Tesla and Chicago is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Chicago Atlantic Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chicago Atlantic Real and Tesla 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 Tesla Inc are associated (or correlated) with Chicago Atlantic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chicago Atlantic Real has no effect on the direction of Tesla i.e., Tesla and Chicago Atlantic go up and down completely randomly.

Pair Corralation between Tesla and Chicago Atlantic

Given the investment horizon of 90 days Tesla Inc is expected to generate 5.33 times more return on investment than Chicago Atlantic. However, Tesla is 5.33 times more volatile than Chicago Atlantic Real. It trades about 0.2 of its potential returns per unit of risk. Chicago Atlantic Real is currently generating about 0.08 per unit of risk. If you would invest  26,251  in Tesla Inc on October 26, 2024 and sell it today you would earn a total of  14,987  from holding Tesla Inc or generate 57.09% return on investment over 90 days.

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

Tesla Inc  vs.  Chicago Atlantic Real

Tesla Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal essential indicators, Tesla sustained solid returns over the last few months and may actually be approaching a breakup point.

Chicago Atlantic Real

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chicago Atlantic Real are ranked lower than 6 (%) 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.

Pair Trading with Tesla and Chicago Atlantic

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

The idea behind Tesla Inc and Chicago Atlantic Real 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.