Correlation Between Ameriprise Financial and Consolidated Communications

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

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

Diversification Opportunities for Ameriprise Financial and Consolidated Communications

0.95

Correlation Coefficient

Ameriprise Financial  Consolidated Communications

Almost no diversification

The 3 months correlation between Ameriprise and Consolidated is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Consolidated Communications Ho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Communications 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 Consolidated Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Communications has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Consolidated Communications go up and down completely randomly.

Pair Corralation between Ameriprise Financial and Consolidated Communications

Assuming the 90 days horizon Ameriprise Financial is expected to generate 2.46 times more return on investment than Consolidated Communications. However, Ameriprise Financial is 2.46 times more volatile than Consolidated Communications Holdings. It trades about 0.25 of its potential returns per unit of risk. Consolidated Communications Holdings is currently generating about 0.16 per unit of risk. If you would invest  39,694  in Ameriprise Financial on September 3, 2024 and sell it today you would earn a total of  14,506  from holding Ameriprise Financial or generate 36.54% return on investment over 90 days.

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

Ameriprise Financial  vs.  Consolidated Communications Ho

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

Consolidated Communications

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Consolidated Communications Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Consolidated Communications may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ameriprise Financial and Consolidated Communications

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

The idea behind Ameriprise Financial and Consolidated Communications Holdings 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 Commodity Directory module to find actively traded commodities issued by global exchanges.