Correlation Between Ameriprise Financial and ScanSource
Can any of the company-specific risk be diversified away by investing in both Ameriprise Financial and ScanSource 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 ScanSource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameriprise Financial and ScanSource, you can compare the effects of market volatilities on Ameriprise Financial and ScanSource 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 ScanSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameriprise Financial and ScanSource.
Diversification Opportunities for Ameriprise Financial and ScanSource
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ameriprise and ScanSource is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource 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 ScanSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScanSource has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and ScanSource go up and down completely randomly.
Pair Corralation between Ameriprise Financial and ScanSource
Assuming the 90 days horizon Ameriprise Financial is expected to generate 1.12 times less return on investment than ScanSource. But when comparing it to its historical volatility, Ameriprise Financial is 1.04 times less risky than ScanSource. It trades about 0.25 of its potential returns per unit of risk. ScanSource is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 3,980 in ScanSource on September 3, 2024 and sell it today you would earn a total of 740.00 from holding ScanSource or generate 18.59% 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. ScanSource
Performance |
| Timeline |
| Ameriprise Financial |
| ScanSource |
Ameriprise Financial and ScanSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ameriprise Financial and ScanSource
The main advantage of trading using opposite Ameriprise Financial and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameriprise Financial position performs unexpectedly, ScanSource 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 ScanSource will offset losses from the drop in ScanSource's long position.| Ameriprise Financial vs. Spirent Communications plc | Ameriprise Financial vs. Penn National Gaming | Ameriprise Financial vs. Hemisphere Energy Corp | Ameriprise Financial vs. QINGCI GAMES INC |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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