Correlation Between Britvic PLC and Ameriprise Financial

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

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

Diversification Opportunities for Britvic PLC and Ameriprise Financial

-0.76

Correlation Coefficient

Britvic PLC  Ameriprise Financial

Pay attention - limited upside

The 3 months correlation between Britvic and Ameriprise is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Britvic PLC ADR and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Britvic PLC 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 Britvic PLC ADR 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 Britvic PLC i.e., Britvic PLC and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Britvic PLC and Ameriprise Financial

Assuming the 90 days horizon Britvic PLC ADR is expected to under-perform the Ameriprise Financial. In addition to that, Britvic PLC is 1.23 times more volatile than Ameriprise Financial. It trades about -0.07 of its total potential returns per unit of risk. Ameriprise Financial is currently generating about 0.08 per unit of volatility. If you would invest  39,003  in Ameriprise Financial on January 25, 2024 and sell it today you would earn a total of  1,766  from holding Ameriprise Financial or generate 4.53% return on investment over 90 days.

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

Britvic PLC ADR  vs.  Ameriprise Financial

Britvic PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Britvic PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Britvic PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ameriprise Financial

Risk-Adjusted Performance

6 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 6 (%) 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 newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Britvic PLC and Ameriprise Financial

The main advantage of trading using opposite Britvic PLC and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Britvic PLC 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 Britvic PLC ADR 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.