Correlation Between Ameriprise Financial and Vista Oil

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

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

Diversification Opportunities for Ameriprise Financial and Vista Oil

0.79

Correlation Coefficient

Ameriprise Financial  Vista Oil

Poor diversification

The 3 months correlation between Ameriprise and Vista is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Vista Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vista Oil Gas 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 Vista Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vista Oil Gas has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Vista Oil go up and down completely randomly.

Pair Corralation between Ameriprise Financial and Vista Oil

Assuming the 90 days trading horizon Ameriprise Financial is expected to generate 0.95 times more return on investment than Vista Oil. However, Ameriprise Financial is 1.05 times less risky than Vista Oil. It trades about 0.14 of its potential returns per unit of risk. Vista Oil Gas is currently generating about 0.13 per unit of risk. If you would invest  844,750  in Ameriprise Financial on September 15, 2024 and sell it today you would earn a total of  255,727  from holding Ameriprise Financial or generate 30.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Ameriprise Financial  vs.  Vista Oil Gas

Ameriprise Financial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Ameriprise Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Vista Oil Gas

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vista Oil Gas are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vista Oil sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ameriprise Financial and Vista Oil

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

The idea behind Ameriprise Financial and Vista Oil Gas 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.