Correlation Between Rivian Automotive and Ameritrans Capital

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

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

Diversification Opportunities for Rivian Automotive and Ameritrans Capital

0.34

Correlation Coefficient

Rivian Automotive  Ameritrans Capital

Weak diversification

The 3 months correlation between Rivian and Ameritrans is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive 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 Rivian Automotive 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 Rivian Automotive 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 Rivian Automotive i.e., Rivian Automotive and Ameritrans Capital go up and down completely randomly.

Pair Corralation between Rivian Automotive and Ameritrans Capital

If you would invest  1.00  in Ameritrans Capital Corp on December 22, 2024 and sell it today you would earn a total of  0.00  from holding Ameritrans Capital Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

Rivian Automotive  vs.  Ameritrans Capital Corp

Rivian Automotive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rivian Automotive has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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 current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Rivian Automotive and Ameritrans Capital

The main advantage of trading using opposite Rivian Automotive and Ameritrans Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rivian Automotive 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 Rivian Automotive 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.