Correlation Between TRAVELERS and Ameriprise Financial

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

By analyzing existing cross correlation between TRAVELERS INC 405 and Ameriprise Financial, you can compare the effects of market volatilities on TRAVELERS 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 TRAVELERS with a short position of Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVELERS and Ameriprise Financial.

Diversification Opportunities for TRAVELERS and Ameriprise Financial

-0.23

Correlation Coefficient

TRAVELERS  Ameriprise Financial

Very good diversification

The 3 months correlation between TRAVELERS and Ameriprise is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding TRAVELERS INC 405 and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and TRAVELERS 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 TRAVELERS INC 405 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 TRAVELERS i.e., TRAVELERS and Ameriprise Financial go up and down completely randomly.

Pair Corralation between TRAVELERS and Ameriprise Financial

Assuming the 90 days trading horizon TRAVELERS INC 405 is expected to generate 0.56 times more return on investment than Ameriprise Financial. However, TRAVELERS INC 405 is 1.79 times less risky than Ameriprise Financial. It trades about 0.03 of its potential returns per unit of risk. Ameriprise Financial is currently generating about -0.05 per unit of risk. If you would invest  8,051  in TRAVELERS INC 405 on December 26, 2024 and sell it today you would earn a total of  73.00  from holding TRAVELERS INC 405 or generate 0.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	55.0%
Values	Daily Returns

TRAVELERS INC 405  vs.  Ameriprise Financial

TRAVELERS INC 405

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVELERS INC 405 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, TRAVELERS is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Ameriprise Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ameriprise Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Ameriprise Financial is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with TRAVELERS and Ameriprise Financial

The main advantage of trading using opposite TRAVELERS and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAVELERS 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 TRAVELERS INC 405 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.