Correlation Between Ameriprise Financial and Transocean

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

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

Diversification Opportunities for Ameriprise Financial and Transocean

-0.09

Correlation Coefficient

Ameriprise Financial  Transocean

Good diversification

The 3 months correlation between Ameriprise and Transocean is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Transocean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transocean 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 Transocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transocean has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Transocean go up and down completely randomly.

Pair Corralation between Ameriprise Financial and Transocean

Considering the 90-day investment horizon Ameriprise Financial is expected to generate 0.52 times more return on investment than Transocean. However, Ameriprise Financial is 1.91 times less risky than Transocean. It trades about 0.25 of its potential returns per unit of risk. Transocean is currently generating about 0.01 per unit of risk. If you would invest  44,067  in Ameriprise Financial on August 31, 2024 and sell it today you would earn a total of  13,330  from holding Ameriprise Financial or generate 30.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Ameriprise Financial  vs.  Transocean

Ameriprise Financial

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain primary indicators, Ameriprise Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Transocean

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Transocean are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Transocean is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ameriprise Financial and Transocean

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

The idea behind Ameriprise Financial and Transocean 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.