Correlation Between Ameriprise Financial and FirstGroup Plc
Can any of the company-specific risk be diversified away by investing in both Ameriprise Financial and FirstGroup Plc 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 FirstGroup Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameriprise Financial and FirstGroup plc, you can compare the effects of market volatilities on Ameriprise Financial and FirstGroup Plc 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 FirstGroup Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameriprise Financial and FirstGroup Plc.
Diversification Opportunities for Ameriprise Financial and FirstGroup Plc
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ameriprise and FirstGroup is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and FirstGroup plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstGroup plc 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 FirstGroup Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstGroup plc has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and FirstGroup Plc go up and down completely randomly.
Pair Corralation between Ameriprise Financial and FirstGroup Plc
Assuming the 90 days horizon Ameriprise Financial is expected to generate 1.02 times more return on investment than FirstGroup Plc. However, Ameriprise Financial is 1.02 times more volatile than FirstGroup plc. It trades about 0.26 of its potential returns per unit of risk. FirstGroup plc is currently generating about 0.01 per unit of risk. If you would invest 38,727 in Ameriprise Financial on September 6, 2024 and sell it today you would earn a total of 14,473 from holding Ameriprise Financial or generate 37.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.46% |
Values | Daily Returns |
Ameriprise Financial vs. FirstGroup plc
Performance |
Timeline |
Ameriprise Financial |
FirstGroup plc |
Ameriprise Financial and FirstGroup Plc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ameriprise Financial and FirstGroup Plc
The main advantage of trading using opposite Ameriprise Financial and FirstGroup Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameriprise Financial position performs unexpectedly, FirstGroup Plc 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 FirstGroup Plc will offset losses from the drop in FirstGroup Plc's long position.Ameriprise Financial vs. Ares Management Corp | Ameriprise Financial vs. Origin Agritech | Ameriprise Financial vs. SIVERS SEMICONDUCTORS AB | Ameriprise Financial vs. Talanx AG |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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