Correlation Between Ares Commercial and Chicago Atlantic
Can any of the company-specific risk be diversified away by investing in both Ares Commercial 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 Ares Commercial and Chicago Atlantic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares Commercial Real and Chicago Atlantic Real, you can compare the effects of market volatilities on Ares Commercial 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 Ares Commercial with a short position of Chicago Atlantic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Commercial and Chicago Atlantic.
Diversification Opportunities for Ares Commercial and Chicago Atlantic
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ares and Chicago is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ares Commercial Real 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 Ares Commercial 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 Ares Commercial Real 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 Ares Commercial i.e., Ares Commercial and Chicago Atlantic go up and down completely randomly.
Pair Corralation between Ares Commercial and Chicago Atlantic
Given the investment horizon of 90 days Ares Commercial Real is expected to under-perform the Chicago Atlantic. In addition to that, Ares Commercial is 3.33 times more volatile than Chicago Atlantic Real. It trades about -0.32 of its total potential returns per unit of risk. Chicago Atlantic Real is currently generating about -0.11 per unit of volatility. If you would invest 1,551 in Chicago Atlantic Real on October 12, 2024 and sell it today you would lose (27.00) from holding Chicago Atlantic Real or give up 1.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Commercial Real vs. Chicago Atlantic Real
Performance |
| Timeline |
| Ares Commercial Real |
| Chicago Atlantic Real |
Ares Commercial and Chicago Atlantic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Commercial and Chicago Atlantic
The main advantage of trading using opposite Ares Commercial and Chicago Atlantic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Commercial 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.| Ares Commercial vs. Two Harbors Investments | Ares Commercial vs. Apollo Commercial Real | Ares Commercial vs. Ellington Financial | Ares Commercial vs. Dynex Capital |
| Chicago Atlantic vs. KKR Real Estate | Chicago Atlantic vs. Ellington Residential Mortgage | Chicago Atlantic vs. Claros Mortgage Trust | Chicago Atlantic vs. Ares Commercial Real |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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