Correlation Between Truist Financial and Ameriprise Financial

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

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

Diversification Opportunities for Truist Financial and Ameriprise Financial

0.93

Correlation Coefficient

Truist Financial  Ameriprise Financial

Almost no diversification

The 3 months correlation between Truist and Ameriprise is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Truist 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 Truist Financial are associated (or correlated) with Ameriprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriprise Financial has no effect on the direction of Truist Financial i.e., Truist Financial and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Truist Financial and Ameriprise Financial

Assuming the 90 days trading horizon Truist Financial is expected to generate 2.02 times less return on investment than Ameriprise Financial. In addition to that, Truist Financial is 1.55 times more volatile than Ameriprise Financial. It trades about 0.03 of its total potential returns per unit of risk. Ameriprise Financial is currently generating about 0.1 per unit of volatility. If you would invest  42,449  in Ameriprise Financial on October 5, 2024 and sell it today you would earn a total of  39,057  from holding Ameriprise Financial or generate 92.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	97.35%
Values	Daily Returns

Truist Financial  vs.  Ameriprise Financial

Truist Financial

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Truist Financial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Truist Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Ameriprise Financial

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain primary indicators, Ameriprise Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Truist Financial and Ameriprise Financial

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

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