Correlation Between Affiliated Managers and Ameriprise Financial

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Can any of the company-specific risk be diversified away by investing in both Affiliated Managers 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 Affiliated Managers and Ameriprise Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Affiliated Managers Group and Ameriprise Financial, you can compare the effects of market volatilities on Affiliated Managers 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 Affiliated Managers with a short position of Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affiliated Managers and Ameriprise Financial.

Diversification Opportunities for Affiliated Managers and Ameriprise Financial

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Affiliated and Ameriprise is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Affiliated Managers Group and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Affiliated Managers 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 Affiliated Managers Group 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 Affiliated Managers i.e., Affiliated Managers and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Affiliated Managers and Ameriprise Financial

Considering the 90-day investment horizon Affiliated Managers is expected to generate 1.1 times less return on investment than Ameriprise Financial. But when comparing it to its historical volatility, Affiliated Managers Group is 1.04 times less risky than Ameriprise Financial. It trades about 0.39 of its potential returns per unit of risk. Ameriprise Financial is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest  40,871  in Ameriprise Financial on December 29, 2023 and sell it today you would earn a total of  2,727  from holding Ameriprise Financial or generate 6.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Affiliated Managers Group  vs.  Ameriprise Financial

 Performance 
       Timeline  
Affiliated Managers 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Affiliated Managers Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal primary indicators, Affiliated Managers may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Ameriprise Financial 

Risk-Adjusted Performance

21 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 21 (%) 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.

Affiliated Managers and Ameriprise Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Affiliated Managers and Ameriprise Financial

The main advantage of trading using opposite Affiliated Managers and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affiliated Managers 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 Affiliated Managers Group 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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