Correlation Between Aozora Bank and Ameriprise Financial
Can any of the company-specific risk be diversified away by investing in both Aozora Bank and Ameriprise Financial 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 Aozora Bank and Ameriprise Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aozora Bank and Ameriprise Financial, you can compare the effects of market volatilities on Aozora Bank and Ameriprise Financial 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 Aozora Bank with a short position of Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aozora Bank and Ameriprise Financial.
Diversification Opportunities for Aozora Bank and Ameriprise Financial
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aozora and Ameriprise is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Aozora Bank and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Aozora Bank 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 Aozora Bank are associated (or correlated) with Ameriprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriprise Financial has no effect on the direction of Aozora Bank i.e., Aozora Bank and Ameriprise Financial go up and down completely randomly.
Pair Corralation between Aozora Bank and Ameriprise Financial
Assuming the 90 days horizon Aozora Bank is expected to under-perform the Ameriprise Financial. But the stock apears to be less risky and, when comparing its historical volatility, Aozora Bank is 1.49 times less risky than Ameriprise Financial. The stock trades about -0.03 of its potential returns per unit of risk. The Ameriprise Financial is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 46,540 in Ameriprise Financial on September 5, 2024 and sell it today you would earn a total of 7,180 from holding Ameriprise Financial or generate 15.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aozora Bank vs. Ameriprise Financial
Performance |
| Timeline |
| Aozora Bank |
| Ameriprise Financial |
Aozora Bank and Ameriprise Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aozora Bank and Ameriprise Financial
The main advantage of trading using opposite Aozora Bank and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aozora Bank position performs unexpectedly, Ameriprise Financial 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 Ameriprise Financial will offset losses from the drop in Ameriprise Financial's long position.The idea behind Aozora Bank and Ameriprise Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Ameriprise Financial vs. Blackstone Group | Ameriprise Financial vs. BlackRock | Ameriprise Financial vs. The Bank of |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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