Correlation Between Ameriprise Financial and Eaton Corp
Can any of the company-specific risk be diversified away by investing in both Ameriprise Financial and Eaton Corp 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 Eaton Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameriprise Financial and Eaton Corp PLC, you can compare the effects of market volatilities on Ameriprise Financial and Eaton Corp 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 Eaton Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameriprise Financial and Eaton Corp.
Diversification Opportunities for Ameriprise Financial and Eaton Corp
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ameriprise and Eaton is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Eaton Corp PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Corp PLC 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 Eaton Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Corp PLC has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Eaton Corp go up and down completely randomly.
Pair Corralation between Ameriprise Financial and Eaton Corp
Assuming the 90 days trading horizon Ameriprise Financial is expected to generate 1.06 times more return on investment than Eaton Corp. However, Ameriprise Financial is 1.06 times more volatile than Eaton Corp PLC. It trades about 0.25 of its potential returns per unit of risk. Eaton Corp PLC is currently generating about 0.24 per unit of risk. If you would invest 50,296 in Ameriprise Financial on September 5, 2024 and sell it today you would earn a total of 6,395 from holding Ameriprise Financial or generate 12.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ameriprise Financial vs. Eaton Corp PLC
Performance |
| Timeline |
| Ameriprise Financial |
| Eaton Corp PLC |
Ameriprise Financial and Eaton Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ameriprise Financial and Eaton Corp
The main advantage of trading using opposite Ameriprise Financial and Eaton Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameriprise Financial position performs unexpectedly, Eaton Corp 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 Eaton Corp will offset losses from the drop in Eaton Corp'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 |
| Eaton Corp vs. Samsung Electronics Co | Eaton Corp vs. Samsung Electronics Co | Eaton Corp vs. Hyundai Motor | Eaton Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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