Correlation Between Ameriprise Financial and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both Ameriprise Financial and Burlington Stores 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 Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameriprise Financial and Burlington Stores, you can compare the effects of market volatilities on Ameriprise Financial and Burlington Stores 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 Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameriprise Financial and Burlington Stores.
Diversification Opportunities for Ameriprise Financial and Burlington Stores
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ameriprise and Burlington is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores 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 Burlington Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burlington Stores has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Burlington Stores go up and down completely randomly.
Pair Corralation between Ameriprise Financial and Burlington Stores
Assuming the 90 days trading horizon Ameriprise Financial is expected to generate 1.3 times less return on investment than Burlington Stores. But when comparing it to its historical volatility, Ameriprise Financial is 1.67 times less risky than Burlington Stores. It trades about 0.15 of its potential returns per unit of risk. Burlington Stores is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 425,300 in Burlington Stores on August 30, 2024 and sell it today you would earn a total of 168,900 from holding Burlington Stores or generate 39.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ameriprise Financial vs. Burlington Stores
Performance |
| Timeline |
| Ameriprise Financial |
| Burlington Stores |
Ameriprise Financial and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ameriprise Financial and Burlington Stores
The main advantage of trading using opposite Ameriprise Financial and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameriprise Financial position performs unexpectedly, Burlington Stores 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 Burlington Stores will offset losses from the drop in Burlington Stores' long position.| Ameriprise Financial vs. First Majestic Silver | Ameriprise Financial vs. FibraHotel | Ameriprise Financial vs. Monster Beverage Corp | Ameriprise Financial vs. Verizon Communications |
| Burlington Stores vs. First Majestic Silver | Burlington Stores vs. Grupo Sports World | Burlington Stores vs. Verizon Communications | Burlington Stores vs. New Oriental Education |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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