Correlation Between Ameriprise Financial and Mitsubishi

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

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

Diversification Opportunities for Ameriprise Financial and Mitsubishi

-0.81

Correlation Coefficient

Ameriprise Financial  Mitsubishi

Pay attention - limited upside

The 3 months correlation between Ameriprise and Mitsubishi is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Mitsubishi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi 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 Mitsubishi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Mitsubishi go up and down completely randomly.

Pair Corralation between Ameriprise Financial and Mitsubishi

Assuming the 90 days horizon Ameriprise Financial is expected to generate 0.57 times more return on investment than Mitsubishi. However, Ameriprise Financial is 1.76 times less risky than Mitsubishi. It trades about 0.12 of its potential returns per unit of risk. Mitsubishi is currently generating about 0.01 per unit of risk. If you would invest  33,599  in Ameriprise Financial on October 9, 2024 and sell it today you would earn a total of  17,361  from holding Ameriprise Financial or generate 51.67% return on investment over 90 days.

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

Ameriprise Financial  vs.  Mitsubishi

Ameriprise Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Ameriprise Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Mitsubishi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitsubishi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Ameriprise Financial and Mitsubishi

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

The idea behind Ameriprise Financial and Mitsubishi 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.