Correlation Between Ameriprise Financial and ITALIAN WINE

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

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

Diversification Opportunities for Ameriprise Financial and ITALIAN WINE

0.39

Correlation Coefficient

Ameriprise Financial  ITALIAN WINE

Weak diversification

The 3 months correlation between Ameriprise and ITALIAN is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and ITALIAN WINE BRANDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITALIAN WINE BRANDS 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 ITALIAN WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITALIAN WINE BRANDS has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and ITALIAN WINE go up and down completely randomly.

Pair Corralation between Ameriprise Financial and ITALIAN WINE

Assuming the 90 days horizon Ameriprise Financial is expected to generate 1.12 times more return on investment than ITALIAN WINE. However, Ameriprise Financial is 1.12 times more volatile than ITALIAN WINE BRANDS. It trades about 0.13 of its potential returns per unit of risk. ITALIAN WINE BRANDS is currently generating about 0.06 per unit of risk. If you would invest  43,950  in Ameriprise Financial on October 8, 2024 and sell it today you would earn a total of  7,010  from holding Ameriprise Financial or generate 15.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Ameriprise Financial  vs.  ITALIAN WINE BRANDS

Ameriprise Financial

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Ameriprise Financial reported solid returns over the last few months and may actually be approaching a breakup point.

ITALIAN WINE BRANDS

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days ITALIAN WINE BRANDS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain basic indicators, ITALIAN WINE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ameriprise Financial and ITALIAN WINE

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

The idea behind Ameriprise Financial and ITALIAN WINE BRANDS 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.