Correlation Between Ameriprise Financial and Celestica

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

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

Diversification Opportunities for Ameriprise Financial and Celestica

0.87

Correlation Coefficient

Ameriprise Financial  Celestica

Very poor diversification

The 3 months correlation between Ameriprise and Celestica is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica 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 Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Celestica go up and down completely randomly.

Pair Corralation between Ameriprise Financial and Celestica

Considering the 90-day investment horizon Ameriprise Financial is expected to under-perform the Celestica. But the stock apears to be less risky and, when comparing its historical volatility, Ameriprise Financial is 3.33 times less risky than Celestica. The stock trades about -0.32 of its potential returns per unit of risk. The Celestica is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  8,916  in Celestica on September 23, 2024 and sell it today you would earn a total of  629.00  from holding Celestica or generate 7.05% 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.  Celestica

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.

Celestica

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Celestica are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent essential indicators, Celestica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ameriprise Financial and Celestica

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

The idea behind Ameriprise Financial and Celestica 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.