Correlation Between Ameriprise Financial and Disney

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

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

Diversification Opportunities for Ameriprise Financial and Disney

0.83

Correlation Coefficient

Ameriprise Financial  Disney

Very poor diversification

The 3 months correlation between Ameriprise and Disney is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and The Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney 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 Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Disney go up and down completely randomly.

Pair Corralation between Ameriprise Financial and Disney

Assuming the 90 days trading horizon Ameriprise Financial is expected to under-perform the Disney. In addition to that, Ameriprise Financial is 1.43 times more volatile than The Walt Disney. It trades about -0.27 of its total potential returns per unit of risk. The Walt Disney is currently generating about -0.29 per unit of volatility. If you would invest  238,184  in The Walt Disney on September 27, 2024 and sell it today you would lose (11,184) from holding The Walt Disney or give up 4.7% of portfolio value over 90 days.

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

Ameriprise Financial  vs.  The Walt Disney

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. In spite of fairly weak basic indicators, Ameriprise Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Walt Disney

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Walt Disney are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Disney showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ameriprise Financial and Disney

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

The idea behind Ameriprise Financial and The Walt Disney 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.