Correlation Between Associated Capital and Ameriprise Financial

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

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

Diversification Opportunities for Associated Capital and Ameriprise Financial

0.84

Correlation Coefficient

Associated Capital  Ameriprise Financial

Very poor diversification

The 3 months correlation between Associated and Ameriprise is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Associated Capital 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 Associated Capital Group 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 Associated Capital i.e., Associated Capital and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Associated Capital and Ameriprise Financial

Allowing for the 90-day total investment horizon Associated Capital Group is expected to under-perform the Ameriprise Financial. But the stock apears to be less risky and, when comparing its historical volatility, Associated Capital Group is 1.73 times less risky than Ameriprise Financial. The stock trades about -0.03 of its potential returns per unit of risk. The Ameriprise Financial is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  50,659  in Ameriprise Financial on September 5, 2024 and sell it today you would earn a total of  5,913  from holding Ameriprise Financial or generate 11.67% return on investment over 90 days.

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

Associated Capital Group  vs.  Ameriprise Financial

Associated Capital

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Associated Capital Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, Associated Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ameriprise Financial

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain primary indicators, Ameriprise Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Associated Capital and Ameriprise Financial

The main advantage of trading using opposite Associated Capital and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Capital 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 Associated Capital Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.