Correlation Between UmweltBank and Ameriprise Financial

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

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

Diversification Opportunities for UmweltBank and Ameriprise Financial

0.59

Correlation Coefficient

UmweltBank  Ameriprise Financial

Very weak diversification

The 3 months correlation between UmweltBank and Ameriprise is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding UmweltBank AG and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and UmweltBank 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 UmweltBank AG 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 UmweltBank i.e., UmweltBank and Ameriprise Financial go up and down completely randomly.

Pair Corralation between UmweltBank and Ameriprise Financial

Assuming the 90 days trading horizon UmweltBank is expected to generate 3.7 times less return on investment than Ameriprise Financial. But when comparing it to its historical volatility, UmweltBank AG is 1.1 times less risky than Ameriprise Financial. It trades about 0.04 of its potential returns per unit of risk. Ameriprise Financial is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  46,313  in Ameriprise Financial on October 24, 2024 and sell it today you would earn a total of  7,427  from holding Ameriprise Financial or generate 16.04% return on investment over 90 days.

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

UmweltBank AG  vs.  Ameriprise Financial

UmweltBank AG

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UmweltBank AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, UmweltBank is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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. Despite nearly fragile basic indicators, Ameriprise Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UmweltBank and Ameriprise Financial

The main advantage of trading using opposite UmweltBank and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UmweltBank 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 UmweltBank AG 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.