Correlation Between Waste Management and Ameriprise Financial

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

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

Diversification Opportunities for Waste Management and Ameriprise Financial

0.9

Correlation Coefficient

Waste Management  Ameriprise Financial

Almost no diversification

The 3 months correlation between Waste and Ameriprise is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Waste Management 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 Waste Management 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 Waste Management i.e., Waste Management and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Waste Management and Ameriprise Financial

Assuming the 90 days trading horizon Waste Management is expected to generate 1.05 times more return on investment than Ameriprise Financial. However, Waste Management is 1.05 times more volatile than Ameriprise Financial. It trades about -0.18 of its potential returns per unit of risk. Ameriprise Financial is currently generating about -0.22 per unit of risk. If you would invest  21,771  in Waste Management on September 19, 2024 and sell it today you would lose (843.00) from holding Waste Management or give up 3.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

Waste Management  vs.  Ameriprise Financial

Waste Management

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Waste Management is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Ameriprise Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ameriprise Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Waste Management and Ameriprise Financial

The main advantage of trading using opposite Waste Management and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management 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 Waste Management 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.