Correlation Between Apple and Ameriprise Financial

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

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

Diversification Opportunities for Apple and Ameriprise Financial

0.76

Correlation Coefficient

Apple  Ameriprise Financial

Poor diversification

The 3 months correlation between Apple and Ameriprise is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Apple 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 Apple Inc 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 Apple i.e., Apple and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Apple and Ameriprise Financial

Assuming the 90 days trading horizon Apple is expected to generate 1.18 times less return on investment than Ameriprise Financial. But when comparing it to its historical volatility, Apple Inc is 1.24 times less risky than Ameriprise Financial. It trades about 0.29 of its potential returns per unit of risk. Ameriprise Financial is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  63,397  in Ameriprise Financial on September 28, 2024 and sell it today you would earn a total of  20,233  from holding Ameriprise Financial or generate 31.91% return on investment over 90 days.

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

Apple Inc  vs.  Ameriprise Financial

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 uncertain basic indicators, Apple sustained solid returns over the last few months and may actually be approaching a breakup point.

Ameriprise Financial

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 22 (%) 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.

Pair Trading with Apple and Ameriprise Financial

The main advantage of trading using opposite Apple and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.