Correlation Between Abingdon Health and Ameriprise Financial

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

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

Diversification Opportunities for Abingdon Health and Ameriprise Financial

-0.82

Correlation Coefficient

Abingdon Health  Ameriprise Financial

Pay attention - limited upside

The 3 months correlation between Abingdon and Ameriprise is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Abingdon Health Plc and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Abingdon Health 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 Abingdon Health Plc are associated (or correlated) with Ameriprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriprise Financial has no effect on the direction of Abingdon Health i.e., Abingdon Health and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Abingdon Health and Ameriprise Financial

Assuming the 90 days trading horizon Abingdon Health Plc is expected to generate 3.05 times more return on investment than Ameriprise Financial. However, Abingdon Health is 3.05 times more volatile than Ameriprise Financial. It trades about 0.04 of its potential returns per unit of risk. Ameriprise Financial is currently generating about 0.08 per unit of risk. If you would invest  475.00  in Abingdon Health Plc on October 7, 2024 and sell it today you would earn a total of  300.00  from holding Abingdon Health Plc or generate 63.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.59%
Values	Daily Returns

Abingdon Health Plc  vs.  Ameriprise Financial

Abingdon Health Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Abingdon Health Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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. In spite of comparatively unsteady basic indicators, Ameriprise Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Abingdon Health and Ameriprise Financial

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

The idea behind Abingdon Health Plc and Ameriprise Financial 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.