Correlation Between Chicago Atlantic and Power REIT
Can any of the company-specific risk be diversified away by investing in both Chicago Atlantic and Power REIT 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 Power REIT 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 Power REIT, you can compare the effects of market volatilities on Chicago Atlantic and Power REIT 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 Power REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chicago Atlantic and Power REIT.
Diversification Opportunities for Chicago Atlantic and Power REIT
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Chicago and Power is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Chicago Atlantic Real and Power REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power REIT 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 Power REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power REIT has no effect on the direction of Chicago Atlantic i.e., Chicago Atlantic and Power REIT go up and down completely randomly.
Pair Corralation between Chicago Atlantic and Power REIT
Given the investment horizon of 90 days Chicago Atlantic is expected to generate 17.5 times less return on investment than Power REIT. But when comparing it to its historical volatility, Chicago Atlantic Real is 14.64 times less risky than Power REIT. It trades about 0.06 of its potential returns per unit of risk. Power REIT is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 87.00 in Power REIT on November 4, 2024 and sell it today you would earn a total of 37.00 from holding Power REIT or generate 42.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.39% |
| Values | Daily Returns |
Chicago Atlantic Real vs. Power REIT
Performance |
| Timeline |
| Chicago Atlantic Real |
| Power REIT |
Chicago Atlantic and Power REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chicago Atlantic and Power REIT
The main advantage of trading using opposite Chicago Atlantic and Power REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chicago Atlantic position performs unexpectedly, Power REIT 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 Power REIT will offset losses from the drop in Power REIT's long position.| Chicago Atlantic vs. KKR Real Estate | Chicago Atlantic vs. Ellington Residential Mortgage | Chicago Atlantic vs. Claros Mortgage Trust | Chicago Atlantic vs. Ares Commercial Real |
| Power REIT vs. Newlake Capital Partners | Power REIT vs. Outfront Media | Power REIT vs. Uniti Group | Power REIT vs. Farmland Partners |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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