Correlation Between Ameriprise Financial and Altair Engineering

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

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

Diversification Opportunities for Ameriprise Financial and Altair Engineering

0.54

Correlation Coefficient

Ameriprise Financial  Altair Engineering

Very weak diversification

The 3 months correlation between Ameriprise and Altair is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering 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 Altair Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altair Engineering has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Altair Engineering go up and down completely randomly.

Pair Corralation between Ameriprise Financial and Altair Engineering

Assuming the 90 days horizon Ameriprise Financial is expected to generate 0.64 times more return on investment than Altair Engineering. However, Ameriprise Financial is 1.55 times less risky than Altair Engineering. It trades about 0.12 of its potential returns per unit of risk. Altair Engineering is currently generating about 0.06 per unit of risk. If you would invest  29,777  in Ameriprise Financial on October 22, 2024 and sell it today you would earn a total of  23,743  from holding Ameriprise Financial or generate 79.74% return on investment over 90 days.

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

Ameriprise Financial  vs.  Altair Engineering

Ameriprise Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ameriprise Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Altair Engineering

Risk-Adjusted Performance

13 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Altair Engineering are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Altair Engineering reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ameriprise Financial and Altair Engineering

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

The idea behind Ameriprise Financial and Altair Engineering 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.