Correlation Between Ameriprise Financial and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both Ameriprise Financial and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameriprise Financial and IMPERIAL TOBACCO , you can compare the effects of market volatilities on Ameriprise Financial and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameriprise Financial and IMPERIAL TOBACCO.
Diversification Opportunities for Ameriprise Financial and IMPERIAL TOBACCO
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ameriprise and IMPERIAL is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between Ameriprise Financial and IMPERIAL TOBACCO
Assuming the 90 days horizon Ameriprise Financial is expected to generate 1.65 times more return on investment than IMPERIAL TOBACCO. However, Ameriprise Financial is 1.65 times more volatile than IMPERIAL TOBACCO . It trades about 0.23 of its potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about 0.23 per unit of risk. If you would invest 39,095 in Ameriprise Financial on September 12, 2024 and sell it today you would earn a total of 12,645 from holding Ameriprise Financial or generate 32.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ameriprise Financial vs. IMPERIAL TOBACCO
Performance |
| Timeline |
| Ameriprise Financial |
| IMPERIAL TOBACCO |
Ameriprise Financial and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ameriprise Financial and IMPERIAL TOBACCO
The main advantage of trading using opposite Ameriprise Financial and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameriprise Financial position performs unexpectedly, IMPERIAL TOBACCO 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 IMPERIAL TOBACCO will offset losses from the drop in IMPERIAL TOBACCO's long position.| Ameriprise Financial vs. Ares Management Corp | Ameriprise Financial vs. Superior Plus Corp | Ameriprise Financial vs. SIVERS SEMICONDUCTORS AB | Ameriprise Financial vs. CHINA HUARONG ENERHD 50 |
| IMPERIAL TOBACCO vs. SLR Investment Corp | IMPERIAL TOBACCO vs. CyberArk Software | IMPERIAL TOBACCO vs. PennantPark Investment | IMPERIAL TOBACCO vs. ECHO INVESTMENT ZY |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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