Correlation Between Ameriprise Financial and Eli Lilly
Can any of the company-specific risk be diversified away by investing in both Ameriprise Financial and Eli Lilly 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 Eli Lilly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameriprise Financial and Eli Lilly and, you can compare the effects of market volatilities on Ameriprise Financial and Eli Lilly 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 Eli Lilly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameriprise Financial and Eli Lilly.
Diversification Opportunities for Ameriprise Financial and Eli Lilly
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ameriprise and Eli is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly 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 Eli Lilly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eli Lilly has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Eli Lilly go up and down completely randomly.
Pair Corralation between Ameriprise Financial and Eli Lilly
Assuming the 90 days trading horizon Ameriprise Financial is expected to generate 1.31 times more return on investment than Eli Lilly. However, Ameriprise Financial is 1.31 times more volatile than Eli Lilly and. It trades about 0.1 of its potential returns per unit of risk. Eli Lilly and is currently generating about -0.05 per unit of risk. If you would invest 909,771 in Ameriprise Financial on September 26, 2024 and sell it today you would earn a total of 176,329 from holding Ameriprise Financial or generate 19.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ameriprise Financial vs. Eli Lilly and
Performance |
Timeline |
Ameriprise Financial |
Eli Lilly |
Ameriprise Financial and Eli Lilly Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ameriprise Financial and Eli Lilly
The main advantage of trading using opposite Ameriprise Financial and Eli Lilly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameriprise Financial position performs unexpectedly, Eli Lilly 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 Eli Lilly will offset losses from the drop in Eli Lilly's long position.Ameriprise Financial vs. UnitedHealth Group Incorporated | Ameriprise Financial vs. United Airlines Holdings | Ameriprise Financial vs. Grupo Carso SAB | Ameriprise Financial vs. DXC Technology |
Eli Lilly vs. Ameriprise Financial | Eli Lilly vs. CVS Health | Eli Lilly vs. Southwest Airlines | Eli Lilly vs. Genworth Financial |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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