Correlation Between Ameriprise Financial and Marfrig Global

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

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

Diversification Opportunities for Ameriprise Financial and Marfrig Global

0.88

Correlation Coefficient

Ameriprise Financial  Marfrig Global

Very poor diversification

The 3 months correlation between Ameriprise and Marfrig is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Marfrig Global Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marfrig Global Foods 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 Marfrig Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marfrig Global Foods has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Marfrig Global go up and down completely randomly.

Pair Corralation between Ameriprise Financial and Marfrig Global

Assuming the 90 days trading horizon Ameriprise Financial is expected to generate 0.42 times more return on investment than Marfrig Global. However, Ameriprise Financial is 2.37 times less risky than Marfrig Global. It trades about -0.11 of its potential returns per unit of risk. Marfrig Global Foods is currently generating about -0.05 per unit of risk. If you would invest  84,448  in Ameriprise Financial on October 8, 2024 and sell it today you would lose (2,336) from holding Ameriprise Financial or give up 2.77% of portfolio value over 90 days.

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

Ameriprise Financial  vs.  Marfrig Global Foods

Ameriprise Financial

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 16 (%) 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.

Marfrig Global Foods

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Marfrig Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ameriprise Financial and Marfrig Global

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

The idea behind Ameriprise Financial and Marfrig Global Foods 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..