Correlation Between Ameriprise Financial and Netflix

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

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

Diversification Opportunities for Ameriprise Financial and Netflix

0.8

Correlation Coefficient

Ameriprise Financial  Netflix

Very poor diversification

The 3 months correlation between Ameriprise and Netflix is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix 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 Netflix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netflix has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Netflix go up and down completely randomly.

Pair Corralation between Ameriprise Financial and Netflix

Assuming the 90 days trading horizon Ameriprise Financial is expected to generate 1.18 times less return on investment than Netflix. In addition to that, Ameriprise Financial is 1.58 times more volatile than Netflix. It trades about 0.14 of its total potential returns per unit of risk. Netflix is currently generating about 0.27 per unit of volatility. If you would invest  1,332,000  in Netflix on September 18, 2024 and sell it today you would earn a total of  527,900  from holding Netflix or generate 39.63% return on investment over 90 days.

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

Ameriprise Financial  vs.  Netflix

Ameriprise Financial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 11 (%) 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.

Netflix

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Netflix showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ameriprise Financial and Netflix

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

The idea behind Ameriprise Financial and Netflix 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.