Correlation Between Catalent and Ameriprise Financial

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

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

Diversification Opportunities for Catalent and Ameriprise Financial

0.19

Correlation Coefficient

Catalent  Ameriprise Financial

Average diversification

The 3 months correlation between Catalent and Ameriprise is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Catalent 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 Catalent 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 Catalent i.e., Catalent and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Catalent and Ameriprise Financial

Given the investment horizon of 90 days Catalent is expected to generate 3.99 times less return on investment than Ameriprise Financial. But when comparing it to its historical volatility, Catalent is 2.63 times less risky than Ameriprise Financial. It trades about 0.13 of its potential returns per unit of risk. Ameriprise Financial is currently generating about 0.19 of returns per unit of risk over similar time horizon. 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

Catalent  vs.  Ameriprise Financial

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.

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.

Pair Trading with Catalent and Ameriprise Financial

The main advantage of trading using opposite Catalent and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalent 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 Catalent 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.