Correlation Between Ebro Foods and Ameriprise Financial

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

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

Diversification Opportunities for Ebro Foods and Ameriprise Financial

-0.5

Correlation Coefficient

Ebro Foods  Ameriprise Financial

Very good diversification

The 3 months correlation between Ebro and Ameriprise is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Ebro Foods 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 Ebro Foods 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 Ebro Foods i.e., Ebro Foods and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Ebro Foods and Ameriprise Financial

Assuming the 90 days trading horizon Ebro Foods is expected to generate 11.47 times less return on investment than Ameriprise Financial. But when comparing it to its historical volatility, Ebro Foods is 2.63 times less risky than Ameriprise Financial. It trades about 0.03 of its potential returns per unit of risk. Ameriprise Financial is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  53,305  in Ameriprise Financial on October 23, 2024 and sell it today you would earn a total of  1,803  from holding Ameriprise Financial or generate 3.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	88.89%
Values	Daily Returns

Ebro Foods  vs.  Ameriprise Financial

Ebro Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ebro Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ebro Foods 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

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ameriprise Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ebro Foods and Ameriprise Financial

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

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.