Correlation Between Ameritrans Capital and Highland Funds

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

By analyzing existing cross correlation between Ameritrans Capital Corp and Highland Funds I, you can compare the effects of market volatilities on Ameritrans Capital and Highland Funds 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 Ameritrans Capital with a short position of Highland Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameritrans Capital and Highland Funds.

Diversification Opportunities for Ameritrans Capital and Highland Funds

0.22

Correlation Coefficient

Ameritrans Capital  Highland Funds

Modest diversification

The 3 months correlation between Ameritrans and Highland is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ameritrans Capital Corp and Highland Funds I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Funds I and Ameritrans Capital 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 Ameritrans Capital Corp are associated (or correlated) with Highland Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Funds I has no effect on the direction of Ameritrans Capital i.e., Ameritrans Capital and Highland Funds go up and down completely randomly.

Pair Corralation between Ameritrans Capital and Highland Funds

If you would invest  1,655  in Highland Funds I on December 23, 2024 and sell it today you would earn a total of  4.00  from holding Highland Funds I or generate 0.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.85%
Values	Daily Returns

Ameritrans Capital Corp  vs.  Highland Funds I

Ameritrans Capital Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ameritrans Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Ameritrans Capital is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Highland Funds I

Risk-Adjusted Performance

Very Weak

Over the last 90 days Highland Funds I has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Highland Funds is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ameritrans Capital and Highland Funds

The main advantage of trading using opposite Ameritrans Capital and Highland Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameritrans Capital position performs unexpectedly, Highland Funds 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 Highland Funds will offset losses from the drop in Highland Funds' long position.

The idea behind Ameritrans Capital Corp and Highland Funds I 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.