Correlation Between EQT AB and Ameriprise Financial

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

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

Diversification Opportunities for EQT AB and Ameriprise Financial

-0.7

Correlation Coefficient

EQT AB  Ameriprise Financial

Excellent diversification

The 3 months correlation between EQT and Ameriprise is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding EQT AB and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and EQT AB 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 EQT AB 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 EQT AB i.e., EQT AB and Ameriprise Financial go up and down completely randomly.

Pair Corralation between EQT AB and Ameriprise Financial

Assuming the 90 days horizon EQT AB is expected to generate 5.65 times less return on investment than Ameriprise Financial. In addition to that, EQT AB is 1.11 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 0.25 per unit of volatility. If you would invest  39,694  in Ameriprise Financial on September 3, 2024 and sell it today you would earn a total of  14,506  from holding Ameriprise Financial or generate 36.54% return on investment over 90 days.

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

EQT AB  vs.  Ameriprise Financial

EQT AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EQT AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, EQT AB is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Ameriprise Financial

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ameriprise Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EQT AB and Ameriprise Financial

The main advantage of trading using opposite EQT AB and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQT AB 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 EQT AB 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.