Correlation Between Ameriprise Financial and Revolution Beauty

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

By analyzing existing cross correlation between Ameriprise Financial and Revolution Beauty Group, you can compare the effects of market volatilities on Ameriprise Financial and Revolution Beauty 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 Revolution Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameriprise Financial and Revolution Beauty.

Diversification Opportunities for Ameriprise Financial and Revolution Beauty

-0.76

Correlation Coefficient

Ameriprise Financial  Revolution Beauty

Pay attention - limited upside

The 3 months correlation between Ameriprise and Revolution is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Revolution Beauty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revolution Beauty 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 Revolution Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revolution Beauty has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Revolution Beauty go up and down completely randomly.

Pair Corralation between Ameriprise Financial and Revolution Beauty

Assuming the 90 days trading horizon Ameriprise Financial is expected to under-perform the Revolution Beauty. But the stock apears to be less risky and, when comparing its historical volatility, Ameriprise Financial is 5.15 times less risky than Revolution Beauty. The stock trades about -0.12 of its potential returns per unit of risk. The Revolution Beauty Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,424  in Revolution Beauty Group on October 7, 2024 and sell it today you would earn a total of  552.00  from holding Revolution Beauty Group or generate 38.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.12%
Values	Daily Returns

Ameriprise Financial  vs.  Revolution Beauty Group

Ameriprise Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Ameriprise Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Revolution Beauty

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Revolution Beauty Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Revolution Beauty unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ameriprise Financial and Revolution Beauty

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

The idea behind Ameriprise Financial and Revolution Beauty Group 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.