Correlation Between INTERNATIONAL and Chicago Atlantic

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

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

Diversification Opportunities for INTERNATIONAL and Chicago Atlantic

0.29

Correlation Coefficient

INTERNATIONAL  Chicago Atlantic

Modest diversification

The 3 months correlation between INTERNATIONAL and Chicago is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding INTERNATIONAL FLAVORS FRAGRANC 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 INTERNATIONAL 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 INTERNATIONAL FLAVORS FRAGRANCES 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 INTERNATIONAL i.e., INTERNATIONAL and Chicago Atlantic go up and down completely randomly.

Pair Corralation between INTERNATIONAL and Chicago Atlantic

Assuming the 90 days trading horizon INTERNATIONAL FLAVORS FRAGRANCES is expected to under-perform the Chicago Atlantic. But the bond apears to be less risky and, when comparing its historical volatility, INTERNATIONAL FLAVORS FRAGRANCES is 2.44 times less risky than Chicago Atlantic. The bond trades about -0.04 of its potential returns per unit of risk. The Chicago Atlantic Real is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,552  in Chicago Atlantic Real on December 27, 2024 and sell it today you would lose (15.00) from holding Chicago Atlantic Real or give up 0.97% of portfolio value over 90 days.

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

INTERNATIONAL FLAVORS FRAGRANC  vs.  Chicago Atlantic Real

INTERNATIONAL FLAVORS

Risk-Adjusted Performance

Very Weak

Over the last 90 days INTERNATIONAL FLAVORS FRAGRANCES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INTERNATIONAL 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

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.

Pair Trading with INTERNATIONAL and Chicago Atlantic

The main advantage of trading using opposite INTERNATIONAL and Chicago Atlantic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTERNATIONAL 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 INTERNATIONAL FLAVORS FRAGRANCES 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..