Correlation Between Ameriprise Financial and Amazon

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

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

Diversification Opportunities for Ameriprise Financial and Amazon

0.34

Correlation Coefficient

Ameriprise Financial  Amazon

Weak diversification

The 3 months correlation between Ameriprise and Amazon is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Amazon go up and down completely randomly.

Pair Corralation between Ameriprise Financial and Amazon

Assuming the 90 days trading horizon Ameriprise Financial is expected to generate 0.92 times more return on investment than Amazon. However, Ameriprise Financial is 1.09 times less risky than Amazon. It trades about -0.26 of its potential returns per unit of risk. Amazon Inc is currently generating about -0.34 per unit of risk. If you would invest  1,177,950  in Ameriprise Financial on December 1, 2024 and sell it today you would lose (90,950) from holding Ameriprise Financial or give up 7.72% of portfolio value over 90 days.

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

Ameriprise Financial  vs.  Amazon Inc

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. In spite of fairly strong basic indicators, Ameriprise Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Amazon Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Amazon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ameriprise Financial and Amazon

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

The idea behind Ameriprise Financial and Amazon Inc 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.