Correlation Between Ameriprise Financial and Companhia Siderrgica

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

By analyzing existing cross correlation between Ameriprise Financial and Companhia Siderrgica Nacional, you can compare the effects of market volatilities on Ameriprise Financial and Companhia Siderrgica 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 Companhia Siderrgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameriprise Financial and Companhia Siderrgica.

Diversification Opportunities for Ameriprise Financial and Companhia Siderrgica

-0.29

Correlation Coefficient

Ameriprise Financial  Companhia Siderrgica

Very good diversification

The 3 months correlation between Ameriprise and Companhia is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Companhia Siderrgica Nacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Siderrgica 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 Companhia Siderrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Siderrgica has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Companhia Siderrgica go up and down completely randomly.

Pair Corralation between Ameriprise Financial and Companhia Siderrgica

Assuming the 90 days trading horizon Ameriprise Financial is expected to generate 0.52 times more return on investment than Companhia Siderrgica. However, Ameriprise Financial is 1.92 times less risky than Companhia Siderrgica. It trades about 0.35 of its potential returns per unit of risk. Companhia Siderrgica Nacional is currently generating about 0.04 per unit of risk. If you would invest  61,370  in Ameriprise Financial on September 5, 2024 and sell it today you would earn a total of  24,458  from holding Ameriprise Financial or generate 39.85% return on investment over 90 days.

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

Ameriprise Financial  vs.  Companhia Siderrgica Nacional

Ameriprise Financial

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 27 (%) 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.

Companhia Siderrgica

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Companhia Siderrgica Nacional are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Companhia Siderrgica may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ameriprise Financial and Companhia Siderrgica

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

The idea behind Ameriprise Financial and Companhia Siderrgica Nacional 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.