Correlation Between Allient and Ameriprise Financial

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

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

Diversification Opportunities for Allient and Ameriprise Financial

0.79

Correlation Coefficient

Allient  Ameriprise Financial

Poor diversification

The 3 months correlation between Allient and Ameriprise is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Allient and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Allient 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 Allient 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 Allient i.e., Allient and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Allient and Ameriprise Financial

Given the investment horizon of 90 days Allient is expected to generate 2.17 times more return on investment than Ameriprise Financial. However, Allient is 2.17 times more volatile than Ameriprise Financial. It trades about -0.08 of its potential returns per unit of risk. Ameriprise Financial is currently generating about -0.32 per unit of risk. If you would invest  2,457  in Allient on September 23, 2024 and sell it today you would lose (109.00) from holding Allient or give up 4.44% of portfolio value over 90 days.

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

Allient  vs.  Ameriprise Financial

Allient

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ameriprise Financial

Risk-Adjusted Performance

10 of 100

OK

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. Even with relatively inconsistent primary indicators, Ameriprise Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allient and Ameriprise Financial

The main advantage of trading using opposite Allient and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allient 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 Allient 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.