Correlation Between NYSE Composite and Ameriprise Financial
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Ameriprise Financial 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 NYSE Composite and Ameriprise Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Ameriprise Financial, you can compare the effects of market volatilities on NYSE Composite and Ameriprise Financial 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 NYSE Composite with a short position of Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Ameriprise Financial.
Diversification Opportunities for NYSE Composite and Ameriprise Financial
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Ameriprise is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and NYSE Composite 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 NYSE Composite are associated (or correlated) with Ameriprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriprise Financial has no effect on the direction of NYSE Composite i.e., NYSE Composite and Ameriprise Financial go up and down completely randomly.
Pair Corralation between NYSE Composite and Ameriprise Financial
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.59 times more return on investment than Ameriprise Financial. However, NYSE Composite is 1.68 times less risky than Ameriprise Financial. It trades about -0.12 of its potential returns per unit of risk. Ameriprise Financial is currently generating about -0.14 per unit of risk. If you would invest 1,812,226 in NYSE Composite on February 5, 2024 and sell it today you would lose (32,437) from holding NYSE Composite or give up 1.79% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
NYSE Composite vs. Ameriprise Financial
Performance |
Timeline |
NYSE Composite and Ameriprise Financial Volatility Contrast
Predicted Return Density |
Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Ameriprise Financial
Pair trading matchups for Ameriprise Financial
Pair Trading with NYSE Composite and Ameriprise Financial
The main advantage of trading using opposite NYSE Composite and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Ameriprise Financial 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 Ameriprise Financial will offset losses from the drop in Ameriprise Financial's long position.NYSE Composite vs. Bridgford Foods | NYSE Composite vs. SunOpta | NYSE Composite vs. Where Food Comes | NYSE Composite vs. Sligro Food Group |
Ameriprise Financial vs. State Street Corp | Ameriprise Financial vs. Bank of New | Ameriprise Financial vs. SEI Investments | Ameriprise Financial vs. Principal Financial Group |
Check out your portfolio center.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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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