Can any of the company-specific risk be diversified away by investing in both Queens Road 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 Queens Road and Ameriprise Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Queens Road Capital and Ameriprise Financial, you can compare the effects of market volatilities on Queens Road 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 Queens Road with a short position of Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Queens Road and Ameriprise Financial.
Diversification Opportunities for Queens Road and Ameriprise Financial
The 3 months correlation between Queens and Ameriprise is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Queens Road Capital and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Queens Road 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 Queens Road Capital 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 Queens Road i.e., Queens Road and Ameriprise Financial go up and down completely randomly.
Pair Corralation between Queens Road and Ameriprise Financial
Assuming the 90 days horizon Queens Road Capital is expected to generate 1.32 times more return on investment than Ameriprise Financial. However, Queens Road is 1.32 times more volatile than Ameriprise Financial. It trades about 0.12 of its potential returns per unit of risk. Ameriprise Financial is currently generating about 0.02 per unit of risk. If you would invest 47.00 in Queens Road Capital on June 28, 2023 and sell it today you would earn a total of 5.00 from holding Queens Road Capital or generate 10.64% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in Queens Road Capital are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Queens Road may actually be approaching a critical reversion point that can send shares even higher in October 2023.
Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable primary indicators, Ameriprise Financial is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
Queens Road and Ameriprise Financial Volatility Contrast
Predicted Return Density
Pair Trading with Queens Road and Ameriprise Financial
The main advantage of trading using opposite Queens Road and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Queens Road 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 Queens Road Capital 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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