Correlation Between Ameriprise Financial and Metalurgica Gerdau
Can any of the company-specific risk be diversified away by investing in both Ameriprise Financial and Metalurgica Gerdau 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 Metalurgica Gerdau into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameriprise Financial and Metalurgica Gerdau SA, you can compare the effects of market volatilities on Ameriprise Financial and Metalurgica Gerdau 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 Metalurgica Gerdau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameriprise Financial and Metalurgica Gerdau.
Diversification Opportunities for Ameriprise Financial and Metalurgica Gerdau
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ameriprise and Metalurgica is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Metalurgica Gerdau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalurgica Gerdau 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 Metalurgica Gerdau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalurgica Gerdau has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Metalurgica Gerdau go up and down completely randomly.
Pair Corralation between Ameriprise Financial and Metalurgica Gerdau
Assuming the 90 days trading horizon Ameriprise Financial is expected to under-perform the Metalurgica Gerdau. But the stock apears to be less risky and, when comparing its historical volatility, Ameriprise Financial is 1.22 times less risky than Metalurgica Gerdau. The stock trades about -0.16 of its potential returns per unit of risk. The Metalurgica Gerdau SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 969.00 in Metalurgica Gerdau SA on November 18, 2024 and sell it today you would earn a total of 4.00 from holding Metalurgica Gerdau SA or generate 0.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Ameriprise Financial vs. Metalurgica Gerdau SA
Performance |
| Timeline |
| Ameriprise Financial |
| Metalurgica Gerdau |
Ameriprise Financial and Metalurgica Gerdau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ameriprise Financial and Metalurgica Gerdau
The main advantage of trading using opposite Ameriprise Financial and Metalurgica Gerdau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameriprise Financial position performs unexpectedly, Metalurgica Gerdau 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 Metalurgica Gerdau will offset losses from the drop in Metalurgica Gerdau's long position.| Ameriprise Financial vs. Delta Air Lines | Ameriprise Financial vs. Patria Investments Limited | Ameriprise Financial vs. T Mobile | Ameriprise Financial vs. NXP Semiconductors NV |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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