Correlation Between Ameriprise Financial and Micron Technology
Can any of the company-specific risk be diversified away by investing in both Ameriprise Financial and Micron Technology 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 Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameriprise Financial and Micron Technology, you can compare the effects of market volatilities on Ameriprise Financial and Micron Technology 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 Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameriprise Financial and Micron Technology.
Diversification Opportunities for Ameriprise Financial and Micron Technology
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ameriprise and Micron is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology 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 Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Micron Technology go up and down completely randomly.
Pair Corralation between Ameriprise Financial and Micron Technology
Assuming the 90 days trading horizon Ameriprise Financial is not expected to generate positive returns. However, Ameriprise Financial is 582.34 times less risky than Micron Technology. It waists most of its returns potential to compensate for thr risk taken. Micron Technology is generating about 0.0 per unit of risk. If you would invest 211,976 in Micron Technology on August 25, 2024 and sell it today you would lose (1,226) from holding Micron Technology or give up 0.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ameriprise Financial vs. Micron Technology
Performance |
| Timeline |
| Ameriprise Financial |
| Micron Technology |
Ameriprise Financial and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ameriprise Financial and Micron Technology
The main advantage of trading using opposite Ameriprise Financial and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameriprise Financial position performs unexpectedly, Micron Technology 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 Micron Technology will offset losses from the drop in Micron Technology's long position.| Ameriprise Financial vs. Cognizant Technology Solutions | Ameriprise Financial vs. Ross Stores | Ameriprise Financial vs. Grupo Sports World | Ameriprise Financial vs. Capital One Financial |
| Micron Technology vs. Cognizant Technology Solutions | Micron Technology vs. Martin Marietta Materials | Micron Technology vs. Verizon Communications | Micron Technology vs. McEwen Mining |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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