Correlation Between Ameriprise Financial and Catalent

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

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

Diversification Opportunities for Ameriprise Financial and Catalent

0.19

Correlation Coefficient

Ameriprise Financial  Catalent

Average diversification

The 3 months correlation between Ameriprise and Catalent is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Catalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalent 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 Catalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalent has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Catalent go up and down completely randomly.

Pair Corralation between Ameriprise Financial and Catalent

Considering the 90-day investment horizon Ameriprise Financial is expected to generate 2.63 times more return on investment than Catalent. However, Ameriprise Financial is 2.63 times more volatile than Catalent. It trades about 0.19 of its potential returns per unit of risk. Catalent is currently generating about 0.13 per unit of risk. If you would invest  45,091  in Ameriprise Financial on September 17, 2024 and sell it today you would earn a total of  9,867  from holding Ameriprise Financial or generate 21.88% return on investment over 90 days.

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

Ameriprise Financial  vs.  Catalent

Ameriprise Financial

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal primary indicators, Ameriprise Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Catalent

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Catalent are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Catalent is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ameriprise Financial and Catalent

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

The idea behind Ameriprise Financial and Catalent 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.