Correlation Between Ameriprise Financial and Broadridge Financial

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

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

Diversification Opportunities for Ameriprise Financial and Broadridge Financial

0.61

Correlation Coefficient

Ameriprise Financial  Broadridge Financial

Poor diversification

The 3 months correlation between Ameriprise and Broadridge is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Broadridge Financial Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadridge Financial 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 Broadridge Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadridge Financial has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Broadridge Financial go up and down completely randomly.

Pair Corralation between Ameriprise Financial and Broadridge Financial

Assuming the 90 days horizon Ameriprise Financial is expected to under-perform the Broadridge Financial. In addition to that, Ameriprise Financial is 1.38 times more volatile than Broadridge Financial Solutions. It trades about -0.07 of its total potential returns per unit of risk. Broadridge Financial Solutions is currently generating about -0.01 per unit of volatility. If you would invest  21,716  in Broadridge Financial Solutions on December 26, 2024 and sell it today you would lose (316.00) from holding Broadridge Financial Solutions or give up 1.46% of portfolio value over 90 days.

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

Ameriprise Financial  vs.  Broadridge Financial Solutions

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 fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Broadridge Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Broadridge Financial Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Broadridge Financial is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ameriprise Financial and Broadridge Financial

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

The idea behind Ameriprise Financial and Broadridge Financial Solutions 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.