Correlation Between Ameriprise Financial and Software Acquisition

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

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

Diversification Opportunities for Ameriprise Financial and Software Acquisition

-0.57

Correlation Coefficient

Ameriprise Financial  Software Acquisition

Excellent diversification

The 3 months correlation between Ameriprise and Software is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Software Acquisition Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Software Acquisition 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 Software Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Software Acquisition has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Software Acquisition go up and down completely randomly.

Pair Corralation between Ameriprise Financial and Software Acquisition

Considering the 90-day investment horizon Ameriprise Financial is expected to generate 101.67 times less return on investment than Software Acquisition. But when comparing it to its historical volatility, Ameriprise Financial is 68.95 times less risky than Software Acquisition. It trades about 0.08 of its potential returns per unit of risk. Software Acquisition Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Software Acquisition Group on October 11, 2024 and sell it today you would lose (11.26) from holding Software Acquisition Group or give up 86.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	45.56%
Values	Daily Returns

Ameriprise Financial  vs.  Software Acquisition Group

Ameriprise Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain primary indicators, Ameriprise Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Software Acquisition

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Software Acquisition Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Software Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ameriprise Financial and Software Acquisition

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

The idea behind Ameriprise Financial and Software Acquisition Group 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.