Correlation Between Ameriprise Financial and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both Ameriprise Financial and Prudential 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 Ameriprise Financial and Prudential Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameriprise Financial and Prudential Financial, you can compare the effects of market volatilities on Ameriprise Financial and Prudential 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 Ameriprise Financial with a short position of Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameriprise Financial and Prudential Financial.
Diversification Opportunities for Ameriprise Financial and Prudential Financial
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ameriprise and Prudential is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial and Ameriprise 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 Ameriprise Financial are associated (or correlated) with Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Prudential Financial go up and down completely randomly.
Pair Corralation between Ameriprise Financial and Prudential Financial
Assuming the 90 days trading horizon Ameriprise Financial is expected to generate 1.13 times more return on investment than Prudential Financial. However, Ameriprise Financial is 1.13 times more volatile than Prudential Financial. It trades about 0.24 of its potential returns per unit of risk. Prudential Financial is currently generating about 0.08 per unit of risk. 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 Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ameriprise Financial vs. Prudential Financial
Performance |
| Timeline |
| Ameriprise Financial |
| Prudential Financial |
Ameriprise Financial and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ameriprise Financial and Prudential Financial
The main advantage of trading using opposite Ameriprise Financial and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameriprise Financial position performs unexpectedly, Prudential 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 Prudential Financial will offset losses from the drop in Prudential Financial's long position.| Ameriprise Financial vs. Samsung Electronics Co | Ameriprise Financial vs. Samsung Electronics Co | Ameriprise Financial vs. Hyundai Motor | Ameriprise Financial vs. Toyota Motor Corp |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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