Correlation Between Ameriprise Financial and Medicover

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

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

Diversification Opportunities for Ameriprise Financial and Medicover

-0.72

Correlation Coefficient

Ameriprise Financial  Medicover

Pay attention - limited upside

The 3 months correlation between Ameriprise and Medicover is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Medicover AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicover AB 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 Medicover. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medicover AB has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Medicover go up and down completely randomly.

Pair Corralation between Ameriprise Financial and Medicover

Assuming the 90 days horizon Ameriprise Financial is expected to generate 1.38 times more return on investment than Medicover. However, Ameriprise Financial is 1.38 times more volatile than Medicover AB. It trades about 0.14 of its potential returns per unit of risk. Medicover AB is currently generating about 0.02 per unit of risk. If you would invest  43,781  in Ameriprise Financial on October 5, 2024 and sell it today you would earn a total of  7,759  from holding Ameriprise Financial or generate 17.72% return on investment over 90 days.

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

Ameriprise Financial  vs.  Medicover AB

Ameriprise Financial

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Ameriprise Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Ameriprise Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Medicover AB

Risk-Adjusted Performance

0 of 100

Insignificant

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

Pair Trading with Ameriprise Financial and Medicover

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

The idea behind Ameriprise Financial and Medicover AB 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.