Correlation Between HE Equipment and Ameriprise Financial
Can any of the company-specific risk be diversified away by investing in both HE Equipment 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 HE Equipment and Ameriprise Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HE Equipment Services and Ameriprise Financial, you can compare the effects of market volatilities on HE Equipment 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 HE Equipment with a short position of Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of HE Equipment and Ameriprise Financial.
Diversification Opportunities for HE Equipment and Ameriprise Financial
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between HEES and Ameriprise is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and HE Equipment 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 HE Equipment Services 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 HE Equipment i.e., HE Equipment and Ameriprise Financial go up and down completely randomly.
Pair Corralation between HE Equipment and Ameriprise Financial
Given the investment horizon of 90 days HE Equipment Services is expected to generate 1.67 times more return on investment than Ameriprise Financial. However, HE Equipment is 1.67 times more volatile than Ameriprise Financial. It trades about 0.1 of its potential returns per unit of risk. Ameriprise Financial is currently generating about 0.15 per unit of risk. If you would invest 4,490 in HE Equipment Services on September 1, 2024 and sell it today you would earn a total of 1,484 from holding HE Equipment Services or generate 33.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
HE Equipment Services vs. Ameriprise Financial
Performance |
| Timeline |
| HE Equipment Services |
| Ameriprise Financial |
HE Equipment and Ameriprise Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HE Equipment and Ameriprise Financial
The main advantage of trading using opposite HE Equipment and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment 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.| HE Equipment vs. McGrath RentCorp | HE Equipment vs. Herc Holdings | HE Equipment vs. PROG Holdings | HE Equipment vs. Custom Truck One |
| Ameriprise Financial vs. State Street Corp | Ameriprise Financial vs. Bank of New | Ameriprise Financial vs. SEI Investments | Ameriprise Financial vs. Principal Financial Group |
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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