Correlation Between Chicago Atlantic and Ready Capital

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Can any of the company-specific risk be diversified away by investing in both Chicago Atlantic and Ready Capital 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 Ready Capital 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 Ready Capital Corp, you can compare the effects of market volatilities on Chicago Atlantic and Ready Capital 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 Ready Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chicago Atlantic and Ready Capital.

Diversification Opportunities for Chicago Atlantic and Ready Capital

0.05
  Correlation Coefficient

Significant diversification

The 3 months correlation between Chicago and Ready is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Chicago Atlantic Real and Ready Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ready Capital Corp 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 Ready Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ready Capital Corp has no effect on the direction of Chicago Atlantic i.e., Chicago Atlantic and Ready Capital go up and down completely randomly.

Pair Corralation between Chicago Atlantic and Ready Capital

Given the investment horizon of 90 days Chicago Atlantic is expected to generate 1.21 times less return on investment than Ready Capital. But when comparing it to its historical volatility, Chicago Atlantic Real is 2.29 times less risky than Ready Capital. It trades about 0.43 of its potential returns per unit of risk. Ready Capital Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  685.00  in Ready Capital Corp on September 1, 2024 and sell it today you would earn a total of  52.00  from holding Ready Capital Corp or generate 7.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Chicago Atlantic Real  vs.  Ready Capital Corp

 Performance 
       Timeline  
Chicago Atlantic Real 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
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.
Ready Capital Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ready Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Ready Capital is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Chicago Atlantic and Ready Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chicago Atlantic and Ready Capital

The main advantage of trading using opposite Chicago Atlantic and Ready Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chicago Atlantic position performs unexpectedly, Ready Capital 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 Ready Capital will offset losses from the drop in Ready Capital's long position.
The idea behind Chicago Atlantic Real and Ready Capital Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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