Correlation Between Ally Financial and Ameriprise Financial
Can any of the company-specific risk be diversified away by investing in both Ally Financial 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 Ally Financial and Ameriprise Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ally Financial and Ameriprise Financial, you can compare the effects of market volatilities on Ally Financial 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 Ally Financial with a short position of Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ally Financial and Ameriprise Financial.
Diversification Opportunities for Ally Financial and Ameriprise Financial
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ally and Ameriprise is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ally Financial and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Ally Financial 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 Ally Financial 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 Ally Financial i.e., Ally Financial and Ameriprise Financial go up and down completely randomly.
Pair Corralation between Ally Financial and Ameriprise Financial
Assuming the 90 days trading horizon Ally Financial is expected to generate 1.43 times less return on investment than Ameriprise Financial. But when comparing it to its historical volatility, Ally Financial is 1.04 times less risky than Ameriprise Financial. It trades about 0.17 of its potential returns per unit of risk. Ameriprise Financial is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 51,263 in Ameriprise Financial on August 27, 2024 and sell it today you would earn a total of 6,144 from holding Ameriprise Financial or generate 11.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ally Financial vs. Ameriprise Financial
Performance |
| Timeline |
| Ally Financial |
| Ameriprise Financial |
Ally Financial and Ameriprise Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ally Financial and Ameriprise Financial
The main advantage of trading using opposite Ally Financial and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ally Financial 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.| Ally Financial vs. Samsung Electronics Co | Ally Financial vs. Samsung Electronics Co | Ally Financial vs. Hyundai Motor | Ally Financial vs. Toyota Motor Corp |
| Ameriprise Financial vs. Samsung Electronics Co | Ameriprise Financial vs. Samsung Electronics Co | Ameriprise Financial vs. Hyundai Motor | Ameriprise Financial vs. Toyota Motor Corp |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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