Correlation Between Ameriprise Financial and InterContinental

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

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

Diversification Opportunities for Ameriprise Financial and InterContinental

0.11

Correlation Coefficient

Ameriprise Financial  InterContinental

Average diversification

The 3 months correlation between Ameriprise and InterContinental is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels 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 InterContinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InterContinental Hotels has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and InterContinental go up and down completely randomly.

Pair Corralation between Ameriprise Financial and InterContinental

Assuming the 90 days horizon Ameriprise Financial is expected to under-perform the InterContinental. But the stock apears to be less risky and, when comparing its historical volatility, Ameriprise Financial is 1.21 times less risky than InterContinental. The stock trades about -0.07 of its potential returns per unit of risk. The InterContinental Hotels Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  11,900  in InterContinental Hotels Group on December 1, 2024 and sell it today you would lose (100.00) from holding InterContinental Hotels Group or give up 0.84% of portfolio value over 90 days.

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

Ameriprise Financial  vs.  InterContinental Hotels Group

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 nearly stable basic indicators, Ameriprise Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

InterContinental Hotels

Risk-Adjusted Performance

Very Weak

Over the last 90 days InterContinental Hotels Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, InterContinental 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 InterContinental

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

The idea behind Ameriprise Financial and InterContinental Hotels Group 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.