Correlation Between KKR Real and Chicago Atlantic

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

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

Diversification Opportunities for KKR Real and Chicago Atlantic

-0.18

Correlation Coefficient

KKR Real  Chicago Atlantic

Good diversification

The 3 months correlation between KKR and Chicago is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding KKR Real Estate 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 KKR Real 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 KKR Real Estate 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 KKR Real i.e., KKR Real and Chicago Atlantic go up and down completely randomly.

Pair Corralation between KKR Real and Chicago Atlantic

Given the investment horizon of 90 days KKR Real is expected to generate 13.34 times less return on investment than Chicago Atlantic. In addition to that, KKR Real is 1.62 times more volatile than Chicago Atlantic Real. It trades about 0.02 of its total potential returns per unit of risk. Chicago Atlantic Real is currently generating about 0.43 per unit of volatility. If you would invest  1,512  in Chicago Atlantic Real on September 1, 2024 and sell it today you would earn a total of  97.00  from holding Chicago Atlantic Real or generate 6.42% return on investment over 90 days.

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

KKR Real Estate  vs.  Chicago Atlantic Real

KKR Real Estate

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KKR Real Estate are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, KKR Real is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Chicago Atlantic Real

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chicago Atlantic Real are ranked lower than 8 (%) 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 KKR Real and Chicago Atlantic

The main advantage of trading using opposite KKR Real and Chicago Atlantic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KKR Real 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 KKR Real Estate 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.