Correlation Between Capital Metals and Ameriprise Financial

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

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

Diversification Opportunities for Capital Metals and Ameriprise Financial

-0.3

Correlation Coefficient

Capital Metals  Ameriprise Financial

Very good diversification

The 3 months correlation between Capital and Ameriprise is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Capital Metals PLC and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Capital Metals 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 Capital Metals PLC 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 Capital Metals i.e., Capital Metals and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Capital Metals and Ameriprise Financial

Assuming the 90 days trading horizon Capital Metals PLC is expected to under-perform the Ameriprise Financial. In addition to that, Capital Metals is 2.28 times more volatile than Ameriprise Financial. It trades about -0.04 of its total potential returns per unit of risk. Ameriprise Financial is currently generating about 0.06 per unit of volatility. If you would invest  52,014  in Ameriprise Financial on October 23, 2024 and sell it today you would earn a total of  3,094  from holding Ameriprise Financial or generate 5.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.08%
Values	Daily Returns

Capital Metals PLC  vs.  Ameriprise Financial

Capital Metals PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Metals PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Ameriprise Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ameriprise Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Capital Metals and Ameriprise Financial

The main advantage of trading using opposite Capital Metals and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Metals 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 Capital Metals PLC 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.