Correlation Between Ameriprise Financial and General Dynamics
Can any of the company-specific risk be diversified away by investing in both Ameriprise Financial and General Dynamics 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 General Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameriprise Financial and General Dynamics, you can compare the effects of market volatilities on Ameriprise Financial and General Dynamics 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 General Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameriprise Financial and General Dynamics.
Diversification Opportunities for Ameriprise Financial and General Dynamics
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ameriprise and General is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and General Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Dynamics 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 General Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Dynamics has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and General Dynamics go up and down completely randomly.
Pair Corralation between Ameriprise Financial and General Dynamics
Assuming the 90 days trading horizon Ameriprise Financial is expected to under-perform the General Dynamics. But the stock apears to be less risky and, when comparing its historical volatility, Ameriprise Financial is 1.44 times less risky than General Dynamics. The stock trades about -0.04 of its potential returns per unit of risk. The General Dynamics is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 530,462 in General Dynamics on October 20, 2024 and sell it today you would earn a total of 11,296 from holding General Dynamics or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ameriprise Financial vs. General Dynamics
Performance |
| Timeline |
| Ameriprise Financial |
| General Dynamics |
Ameriprise Financial and General Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ameriprise Financial and General Dynamics
The main advantage of trading using opposite Ameriprise Financial and General Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameriprise Financial position performs unexpectedly, General Dynamics 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 General Dynamics will offset losses from the drop in General Dynamics' long position.| Ameriprise Financial vs. Grupo Carso SAB | Ameriprise Financial vs. United States Steel | Ameriprise Financial vs. Genworth Financial | Ameriprise Financial vs. Micron Technology |
| General Dynamics vs. The Boeing | General Dynamics vs. Lockheed Martin | General Dynamics vs. Textron | General Dynamics vs. Amazon 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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