Correlation Between Coca-Cola HBC and Ameriprise Financial

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

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

Diversification Opportunities for Coca-Cola HBC and Ameriprise Financial

0.12

Correlation Coefficient

Coca-Cola HBC  Ameriprise Financial

Average diversification

The 3 months correlation between Coca-Cola and Ameriprise is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola HBC AG and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Coca-Cola HBC 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 Coca Cola HBC AG 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 Coca-Cola HBC i.e., Coca-Cola HBC and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Coca-Cola HBC and Ameriprise Financial

Assuming the 90 days horizon Coca Cola HBC AG is expected to under-perform the Ameriprise Financial. In addition to that, Coca-Cola HBC is 1.79 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 0.08 per unit of volatility. If you would invest  35,097  in Ameriprise Financial on January 18, 2024 and sell it today you would earn a total of  6,080  from holding Ameriprise Financial or generate 17.32% return on investment over 90 days.

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

Coca Cola HBC AG  vs.  Ameriprise Financial

Coca Cola HBC

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola HBC AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, Coca-Cola HBC 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

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal primary indicators, Ameriprise Financial may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Coca-Cola HBC and Ameriprise Financial

The main advantage of trading using opposite Coca-Cola HBC and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca-Cola HBC 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 Coca Cola HBC AG 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.