Correlation Between CTS and Ameriprise Financial

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

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

Diversification Opportunities for CTS and Ameriprise Financial

0.84

Correlation Coefficient

CTS  Ameriprise Financial

Very poor diversification

The 3 months correlation between CTS and Ameriprise is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding CTS Corp. and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and CTS 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 CTS Corporation 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 CTS i.e., CTS and Ameriprise Financial go up and down completely randomly.

Pair Corralation between CTS and Ameriprise Financial

Considering the 90-day investment horizon CTS Corporation is expected to generate 1.67 times more return on investment than Ameriprise Financial. However, CTS is 1.67 times more volatile than Ameriprise Financial. It trades about -0.1 of its potential returns per unit of risk. Ameriprise Financial is currently generating about -0.32 per unit of risk. If you would invest  5,429  in CTS Corporation on September 23, 2024 and sell it today you would lose (209.00) from holding CTS Corporation or give up 3.85% of portfolio value over 90 days.

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

CTS Corp.  vs.  Ameriprise Financial

CTS Corporation

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CTS Corporation are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, CTS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ameriprise Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent primary indicators, Ameriprise Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CTS and Ameriprise Financial

The main advantage of trading using opposite CTS and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTS 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 CTS Corporation 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.