Correlation Between BANCO and Chicago Atlantic

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

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

Diversification Opportunities for BANCO and Chicago Atlantic

-0.1

Correlation Coefficient

BANCO  Chicago Atlantic

Good diversification

The 3 months correlation between BANCO and Chicago is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding BANCO SANTANDER SA 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 BANCO 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 BANCO SANTANDER SA 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 BANCO i.e., BANCO and Chicago Atlantic go up and down completely randomly.

Pair Corralation between BANCO and Chicago Atlantic

Assuming the 90 days trading horizon BANCO SANTANDER SA is expected to under-perform the Chicago Atlantic. In addition to that, BANCO is 2.07 times more volatile than Chicago Atlantic Real. It trades about -0.24 of its total potential returns per unit of risk. Chicago Atlantic Real is currently generating about 0.1 per unit of volatility. If you would invest  1,550  in Chicago Atlantic Real on October 25, 2024 and sell it today you would earn a total of  18.00  from holding Chicago Atlantic Real or generate 1.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.89%
Values	Daily Returns

BANCO SANTANDER SA  vs.  Chicago Atlantic Real

BANCO SANTANDER SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANCO SANTANDER SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BANCO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Chicago Atlantic Real

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chicago Atlantic Real are ranked lower than 12 (%) 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.

Pair Trading with BANCO and Chicago Atlantic

The main advantage of trading using opposite BANCO and Chicago Atlantic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANCO 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 BANCO SANTANDER SA 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.