Correlation Between Investor and Ameritrans Capital

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

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

Diversification Opportunities for Investor and Ameritrans Capital

0.45

Correlation Coefficient

Investor  Ameritrans Capital

Very weak diversification

The 3 months correlation between Investor and Ameritrans is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and Ameritrans Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameritrans Capital Corp and Investor 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 Investor AB ser are associated (or correlated) with Ameritrans Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameritrans Capital Corp has no effect on the direction of Investor i.e., Investor and Ameritrans Capital go up and down completely randomly.

Pair Corralation between Investor and Ameritrans Capital

Assuming the 90 days horizon Investor AB ser is expected to generate 0.13 times more return on investment than Ameritrans Capital. However, Investor AB ser is 7.82 times less risky than Ameritrans Capital. It trades about -0.08 of its potential returns per unit of risk. Ameritrans Capital Corp is currently generating about -0.15 per unit of risk. If you would invest  2,845  in Investor AB ser on October 6, 2024 and sell it today you would lose (184.00) from holding Investor AB ser or give up 6.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.35%
Values	Daily Returns

Investor AB ser  vs.  Ameritrans Capital Corp

Investor AB ser

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investor AB ser has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Investor is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Ameritrans Capital Corp

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Preferred Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Investor and Ameritrans Capital

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

The idea behind Investor AB ser and Ameritrans 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 Stocks Directory module to find actively traded stocks across global markets.