Correlation Between Ameriprise Financial and Group 1

Can any of the company-specific risk be diversified away by investing in both Ameriprise Financial and Group 1 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 Group 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ameriprise Financial and Group 1 Automotive, you can compare the effects of market volatilities on Ameriprise Financial and Group 1 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 Group 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameriprise Financial and Group 1.

Diversification Opportunities for Ameriprise Financial and Group 1

0.53

Correlation Coefficient

Ameriprise Financial  Group 1

Very weak diversification

The 3 months correlation between Ameriprise and Group is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Group 1 Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 1 Automotive 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 Group 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 1 Automotive has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Group 1 go up and down completely randomly.

Pair Corralation between Ameriprise Financial and Group 1

Considering the 90-day investment horizon Ameriprise Financial is expected to under-perform the Group 1. But the stock apears to be less risky and, when comparing its historical volatility, Ameriprise Financial is 1.17 times less risky than Group 1. The stock trades about -0.05 of its potential returns per unit of risk. The Group 1 Automotive is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  41,953  in Group 1 Automotive on December 20, 2024 and sell it today you would lose (1,898) from holding Group 1 Automotive or give up 4.52% of portfolio value over 90 days.

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

Ameriprise Financial  vs.  Group 1 Automotive

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. Even with relatively invariable primary indicators, Ameriprise Financial is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Group 1 Automotive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Group 1 Automotive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Group 1 is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Ameriprise Financial and Group 1

The main advantage of trading using opposite Ameriprise Financial and Group 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameriprise Financial position performs unexpectedly, Group 1 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 Group 1 will offset losses from the drop in Group 1's long position.

The idea behind Ameriprise Financial and Group 1 Automotive 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.