Correlation Between Ameriprise Financial and Marathon Petroleum

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

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

Diversification Opportunities for Ameriprise Financial and Marathon Petroleum

-0.69

Correlation Coefficient

Ameriprise Financial  Marathon Petroleum

Excellent diversification

The 3 months correlation between Ameriprise and Marathon is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Marathon Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Petroleum 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 Marathon Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marathon Petroleum has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Marathon Petroleum go up and down completely randomly.

Pair Corralation between Ameriprise Financial and Marathon Petroleum

Assuming the 90 days trading horizon Ameriprise Financial is expected to generate 1.4 times more return on investment than Marathon Petroleum. However, Ameriprise Financial is 1.4 times more volatile than Marathon Petroleum. It trades about 0.17 of its potential returns per unit of risk. Marathon Petroleum is currently generating about -0.06 per unit of risk. If you would invest  59,647  in Ameriprise Financial on September 29, 2024 and sell it today you would earn a total of  23,681  from holding Ameriprise Financial or generate 39.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Ameriprise Financial  vs.  Marathon Petroleum

Ameriprise Financial

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Ameriprise Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Marathon Petroleum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marathon Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Ameriprise Financial and Marathon Petroleum

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

The idea behind Ameriprise Financial and Marathon Petroleum 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.