Correlation Between Singapore Airlines and Ameriprise Financial

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

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

Diversification Opportunities for Singapore Airlines and Ameriprise Financial

-0.34

Correlation Coefficient

Singapore Airlines  Ameriprise Financial

Very good diversification

The 3 months correlation between Singapore and Ameriprise is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines Limited and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Singapore Airlines 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 Singapore Airlines Limited 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 Singapore Airlines i.e., Singapore Airlines and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Singapore Airlines and Ameriprise Financial

Assuming the 90 days trading horizon Singapore Airlines is expected to generate 23.12 times less return on investment than Ameriprise Financial. But when comparing it to its historical volatility, Singapore Airlines Limited is 1.65 times less risky than Ameriprise Financial. It trades about 0.01 of its potential returns per unit of risk. Ameriprise Financial is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  41,348  in Ameriprise Financial on September 22, 2024 and sell it today you would earn a total of  9,132  from holding Ameriprise Financial or generate 22.09% return on investment over 90 days.

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

Singapore Airlines Limited  vs.  Ameriprise Financial

Singapore Airlines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Singapore Airlines Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Singapore Airlines is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Ameriprise Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ameriprise Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Singapore Airlines and Ameriprise Financial

The main advantage of trading using opposite Singapore Airlines and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Airlines 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 Singapore Airlines Limited 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.