Correlation Between Horizon Technology and Ameriprise Financial

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Can any of the company-specific risk be diversified away by investing in both Horizon Technology 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 Horizon Technology and Ameriprise Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Horizon Technology Finance and Ameriprise Financial, you can compare the effects of market volatilities on Horizon Technology 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 Horizon Technology with a short position of Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Technology and Ameriprise Financial.

Diversification Opportunities for Horizon Technology and Ameriprise Financial

-0.91
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Horizon and Ameriprise is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Technology Finance and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Horizon Technology 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 Horizon Technology Finance 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 Horizon Technology i.e., Horizon Technology and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Horizon Technology and Ameriprise Financial

Given the investment horizon of 90 days Horizon Technology Finance is expected to under-perform the Ameriprise Financial. But the stock apears to be less risky and, when comparing its historical volatility, Horizon Technology Finance is 1.05 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 0.1 of returns per unit of risk over similar time horizon. If you would invest  34,929  in Ameriprise Financial on September 12, 2024 and sell it today you would earn a total of  19,705  from holding Ameriprise Financial or generate 56.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Horizon Technology Finance  vs.  Ameriprise Financial

 Performance 
       Timeline  
Horizon Technology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Horizon Technology Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
Ameriprise Financial 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating primary indicators, Ameriprise Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Horizon Technology and Ameriprise Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Horizon Technology and Ameriprise Financial

The main advantage of trading using opposite Horizon Technology and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Technology 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 Horizon Technology Finance 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.
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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