Correlation Between Credit Acceptance and Ameriprise Financial
Can any of the company-specific risk be diversified away by investing in both Credit Acceptance 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 Credit Acceptance and Ameriprise Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credit Acceptance and Ameriprise Financial, you can compare the effects of market volatilities on Credit Acceptance 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 Credit Acceptance with a short position of Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Acceptance and Ameriprise Financial.
Diversification Opportunities for Credit Acceptance and Ameriprise Financial
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Credit and Ameriprise is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Credit Acceptance and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Credit Acceptance 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 Credit Acceptance 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 Credit Acceptance i.e., Credit Acceptance and Ameriprise Financial go up and down completely randomly.
Pair Corralation between Credit Acceptance and Ameriprise Financial
Assuming the 90 days trading horizon Credit Acceptance is expected to generate 2.43 times less return on investment than Ameriprise Financial. In addition to that, Credit Acceptance is 1.24 times more volatile than Ameriprise Financial. It trades about 0.03 of its total potential returns per unit of risk. Ameriprise Financial is currently generating about 0.1 per unit of volatility. If you would invest 41,486 in Ameriprise Financial on August 30, 2024 and sell it today you would earn a total of 42,812 from holding Ameriprise Financial or generate 103.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 97.36% |
| Values | Daily Returns |
Credit Acceptance vs. Ameriprise Financial
Performance |
| Timeline |
| Credit Acceptance |
| Ameriprise Financial |
Credit Acceptance and Ameriprise Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credit Acceptance and Ameriprise Financial
The main advantage of trading using opposite Credit Acceptance and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Acceptance 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.| Credit Acceptance vs. Extra Space Storage | Credit Acceptance vs. Warner Music Group | Credit Acceptance vs. GP Investments | Credit Acceptance vs. G2D Investments |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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