Correlation Between Electrovaya Common and Ameriprise Financial

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

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

Diversification Opportunities for Electrovaya Common and Ameriprise Financial

0.47

Correlation Coefficient

Electrovaya Common  Ameriprise Financial

Very weak diversification

The 3 months correlation between Electrovaya and Ameriprise is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Electrovaya Common Shares and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Electrovaya Common 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 Electrovaya Common Shares 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 Electrovaya Common i.e., Electrovaya Common and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Electrovaya Common and Ameriprise Financial

Given the investment horizon of 90 days Electrovaya Common is expected to generate 6.81 times less return on investment than Ameriprise Financial. In addition to that, Electrovaya Common is 2.61 times more volatile than Ameriprise Financial. It trades about 0.01 of its total potential returns per unit of risk. Ameriprise Financial is currently generating about 0.14 per unit of volatility. If you would invest  46,072  in Ameriprise Financial on September 22, 2024 and sell it today you would earn a total of  7,140  from holding Ameriprise Financial or generate 15.5% return on investment over 90 days.

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

Electrovaya Common Shares  vs.  Ameriprise Financial

Electrovaya Common Shares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electrovaya Common Shares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Electrovaya Common is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Ameriprise Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 10 (%) 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 Electrovaya Common and Ameriprise Financial

The main advantage of trading using opposite Electrovaya Common and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electrovaya Common 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 Electrovaya Common Shares 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..