Correlation Between Ameriprise Financial and Apple

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

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

Diversification Opportunities for Ameriprise Financial and Apple

0.76

Correlation Coefficient

Ameriprise Financial  Apple

Poor diversification

The 3 months correlation between Ameriprise and Apple is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Ameriprise Financial 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 Ameriprise Financial are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Apple go up and down completely randomly.

Pair Corralation between Ameriprise Financial and Apple

Assuming the 90 days trading horizon Ameriprise Financial is expected to generate 1.21 times more return on investment than Apple. However, Ameriprise Financial is 1.21 times more volatile than Apple Inc. It trades about 0.26 of its potential returns per unit of risk. Apple Inc is currently generating about 0.3 per unit of risk. If you would invest  63,945  in Ameriprise Financial on September 27, 2024 and sell it today you would earn a total of  18,411  from holding Ameriprise Financial or generate 28.79% return on investment over 90 days.

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

Ameriprise Financial  vs.  Apple Inc

Ameriprise Financial

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Ameriprise Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Apple sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ameriprise Financial and Apple

The main advantage of trading using opposite Ameriprise Financial and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameriprise Financial position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.

The idea behind Ameriprise Financial and Apple Inc 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.