Correlation Between Ameriprise Financial and Rivian Automotive

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

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

Diversification Opportunities for Ameriprise Financial and Rivian Automotive

-0.81

Correlation Coefficient

Ameriprise Financial  Rivian Automotive

Pay attention - limited upside

The 3 months correlation between Ameriprise and Rivian is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Rivian Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rivian Automotive and Ameriprise Financial 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 Ameriprise Financial are associated (or correlated) with Rivian Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rivian Automotive has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Rivian Automotive go up and down completely randomly.

Pair Corralation between Ameriprise Financial and Rivian Automotive

Considering the 90-day investment horizon Ameriprise Financial is expected to generate 0.4 times more return on investment than Rivian Automotive. However, Ameriprise Financial is 2.5 times less risky than Rivian Automotive. It trades about 0.25 of its potential returns per unit of risk. Rivian Automotive is currently generating about -0.06 per unit of risk. If you would invest  43,243  in Ameriprise Financial on August 22, 2024 and sell it today you would earn a total of  13,013  from holding Ameriprise Financial or generate 30.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Ameriprise Financial  vs.  Rivian Automotive

Ameriprise Financial

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal primary indicators, Ameriprise Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Rivian Automotive

Risk-Adjusted Performance

0 of 100

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 fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ameriprise Financial and Rivian Automotive

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

The idea behind Ameriprise Financial and Rivian Automotive 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.

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 Global Correlations module to find global opportunities by holding instruments from different markets.