Correlation Between Vista Oil and Ameriprise Financial

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

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

Diversification Opportunities for Vista Oil and Ameriprise Financial

0.79

Correlation Coefficient

Vista Oil  Ameriprise Financial

Poor diversification

The 3 months correlation between Vista and Ameriprise is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Vista Oil Gas and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Vista Oil 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 Vista Oil Gas 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 Vista Oil i.e., Vista Oil and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Vista Oil and Ameriprise Financial

Assuming the 90 days trading horizon Vista Oil is expected to generate 1.03 times less return on investment than Ameriprise Financial. In addition to that, Vista Oil is 1.05 times more volatile than Ameriprise Financial. It trades about 0.13 of its total potential returns per unit of risk. Ameriprise Financial is currently generating about 0.14 per unit of volatility. If you would invest  844,750  in Ameriprise Financial on September 16, 2024 and sell it today you would earn a total of  255,727  from holding Ameriprise Financial or generate 30.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Vista Oil Gas  vs.  Ameriprise Financial

Vista Oil Gas

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vista Oil Gas are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vista Oil sustained solid returns over the last few months and may actually be approaching a breakup point.

Ameriprise Financial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 11 (%) 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 Vista Oil and Ameriprise Financial

The main advantage of trading using opposite Vista Oil and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vista Oil 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 Vista Oil Gas 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.