Correlation Between Freeport McMoRan and Ameriprise Financial
Can any of the company-specific risk be diversified away by investing in both Freeport McMoRan 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 Freeport McMoRan and Ameriprise Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freeport McMoRan and Ameriprise Financial, you can compare the effects of market volatilities on Freeport McMoRan 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 Freeport McMoRan with a short position of Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport McMoRan and Ameriprise Financial.
Diversification Opportunities for Freeport McMoRan and Ameriprise Financial
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Freeport and Ameriprise is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoRan and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Freeport McMoRan 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 Freeport McMoRan 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 Freeport McMoRan i.e., Freeport McMoRan and Ameriprise Financial go up and down completely randomly.
Pair Corralation between Freeport McMoRan and Ameriprise Financial
Assuming the 90 days trading horizon Freeport McMoRan is expected to under-perform the Ameriprise Financial. But the stock apears to be less risky and, when comparing its historical volatility, Freeport McMoRan is 3.39 times less risky than Ameriprise Financial. The stock trades about -0.17 of its potential returns per unit of risk. The Ameriprise Financial is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 928,889 in Ameriprise Financial on September 4, 2024 and sell it today you would earn a total of 229,264 from holding Ameriprise Financial or generate 24.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Freeport McMoRan vs. Ameriprise Financial
Performance |
| Timeline |
| Freeport McMoRan |
| Ameriprise Financial |
Freeport McMoRan and Ameriprise Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freeport McMoRan and Ameriprise Financial
The main advantage of trading using opposite Freeport McMoRan and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport McMoRan 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.| Freeport McMoRan vs. Southern Copper | Freeport McMoRan vs. Grupo Hotelero Santa | Freeport McMoRan vs. The Walt Disney | Freeport McMoRan vs. International Business Machines |
| Ameriprise Financial vs. The Select Sector | Ameriprise Financial vs. Promotora y Operadora | Ameriprise Financial vs. SPDR Series Trust | Ameriprise Financial vs. Vanguard World |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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