Correlation Between Singapore Airlines and Ameriprise Financial
Can any of the company-specific risk be diversified away by investing in both Singapore Airlines 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 Singapore Airlines and Ameriprise Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Singapore Airlines Limited and Ameriprise Financial, you can compare the effects of market volatilities on Singapore Airlines 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 Singapore Airlines with a short position of Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Airlines and Ameriprise Financial.
Diversification Opportunities for Singapore Airlines and Ameriprise Financial
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Singapore and Ameriprise is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines Limited and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Singapore Airlines 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 Singapore Airlines Limited 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 Singapore Airlines i.e., Singapore Airlines and Ameriprise Financial go up and down completely randomly.
Pair Corralation between Singapore Airlines and Ameriprise Financial
Assuming the 90 days trading horizon Singapore Airlines is expected to generate 1.63 times less return on investment than Ameriprise Financial. But when comparing it to its historical volatility, Singapore Airlines Limited is 1.15 times less risky than Ameriprise Financial. It trades about 0.06 of its potential returns per unit of risk. Ameriprise Financial is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 30,788 in Ameriprise Financial on December 7, 2024 and sell it today you would earn a total of 15,102 from holding Ameriprise Financial or generate 49.05% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Singapore Airlines Limited vs. Ameriprise Financial
Performance |
Timeline |
Singapore Airlines |
Ameriprise Financial |
Singapore Airlines and Ameriprise Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Singapore Airlines and Ameriprise Financial
The main advantage of trading using opposite Singapore Airlines and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Airlines 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.Singapore Airlines vs. Mitsubishi Materials | Singapore Airlines vs. NEWELL RUBBERMAID | Singapore Airlines vs. VULCAN MATERIALS | Singapore Airlines vs. RYU Apparel |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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