Correlation Between CVR Energy and Ameriprise Financial

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

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

Diversification Opportunities for CVR Energy and Ameriprise Financial

-0.62

Correlation Coefficient

CVR Energy  Ameriprise Financial

Excellent diversification

The 3 months correlation between CVR and Ameriprise is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and CVR Energy 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 CVR Energy 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 CVR Energy i.e., CVR Energy and Ameriprise Financial go up and down completely randomly.

Pair Corralation between CVR Energy and Ameriprise Financial

Assuming the 90 days trading horizon CVR Energy is expected to under-perform the Ameriprise Financial. In addition to that, CVR Energy is 2.22 times more volatile than Ameriprise Financial. It trades about -0.04 of its total potential returns per unit of risk. Ameriprise Financial is currently generating about 0.16 per unit of volatility. If you would invest  34,651  in Ameriprise Financial on August 31, 2024 and sell it today you would earn a total of  22,746  from holding Ameriprise Financial or generate 65.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.59%
Values	Daily Returns

CVR Energy  vs.  Ameriprise Financial

CVR Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVR Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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. In spite of comparatively unsteady basic indicators, Ameriprise Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVR Energy and Ameriprise Financial

The main advantage of trading using opposite CVR Energy and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVR Energy 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.

The idea behind CVR Energy and Ameriprise Financial 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.