Correlation Between Ameriprise Financial and Waste Management

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

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

Diversification Opportunities for Ameriprise Financial and Waste Management

-0.12

Correlation Coefficient

Ameriprise Financial  Waste Management

Good diversification

The 3 months correlation between Ameriprise and Waste is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Waste Management go up and down completely randomly.

Pair Corralation between Ameriprise Financial and Waste Management

Assuming the 90 days trading horizon Ameriprise Financial is expected to under-perform the Waste Management. In addition to that, Ameriprise Financial is 1.4 times more volatile than Waste Management. It trades about -0.07 of its total potential returns per unit of risk. Waste Management is currently generating about 0.21 per unit of volatility. If you would invest  61,740  in Waste Management on December 2, 2024 and sell it today you would earn a total of  6,152  from holding Waste Management or generate 9.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.02%
Values	Daily Returns

Ameriprise Financial  vs.  Waste Management

Ameriprise Financial

Risk-Adjusted Performance

Very Weak

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

Waste Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days Waste Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Waste Management is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ameriprise Financial and Waste Management

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

The idea behind Ameriprise Financial and Waste Management 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.