Correlation Between Starbucks and Ameriprise Financial

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

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

Diversification Opportunities for Starbucks and Ameriprise Financial

0.31

Correlation Coefficient

Starbucks  Ameriprise Financial

Weak diversification

The 3 months correlation between Starbucks and Ameriprise is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Starbucks 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 Starbucks 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 Starbucks i.e., Starbucks and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Starbucks and Ameriprise Financial

Assuming the 90 days trading horizon Starbucks is expected to under-perform the Ameriprise Financial. In addition to that, Starbucks is 1.57 times more volatile than Ameriprise Financial. It trades about -0.23 of its total potential returns per unit of risk. Ameriprise Financial is currently generating about -0.23 per unit of volatility. If you would invest  1,158,153  in Ameriprise Financial on October 4, 2024 and sell it today you would lose (62,453) from holding Ameriprise Financial or give up 5.39% of portfolio value over 90 days.

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

Starbucks  vs.  Ameriprise Financial

Starbucks

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Starbucks are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Starbucks is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ameriprise Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Ameriprise Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Starbucks and Ameriprise Financial

The main advantage of trading using opposite Starbucks and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starbucks 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 Starbucks 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.