Correlation Between Coca Cola and Ameriprise Financial
Can any of the company-specific risk be diversified away by investing in both Coca Cola 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 Coca Cola and Ameriprise Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Coca Cola and Ameriprise Financial, you can compare the effects of market volatilities on Coca Cola 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 Coca Cola with a short position of Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Ameriprise Financial.
Diversification Opportunities for Coca Cola and Ameriprise Financial
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coca and Ameriprise is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Coca Cola 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 The Coca Cola 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 Coca Cola i.e., Coca Cola and Ameriprise Financial go up and down completely randomly.
Pair Corralation between Coca Cola and Ameriprise Financial
Assuming the 90 days horizon Coca Cola is expected to generate 2.78 times less return on investment than Ameriprise Financial. But when comparing it to its historical volatility, The Coca Cola is 1.63 times less risky than Ameriprise Financial. It trades about 0.07 of its potential returns per unit of risk. Ameriprise Financial is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 543,000 in Ameriprise Financial on August 31, 2024 and sell it today you would earn a total of 615,153 from holding Ameriprise Financial or generate 113.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
The Coca Cola vs. Ameriprise Financial
Performance |
| Timeline |
| Coca Cola |
| Ameriprise Financial |
Coca Cola and Ameriprise Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Ameriprise Financial
The main advantage of trading using opposite Coca Cola and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola 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.| Coca Cola vs. PepsiCo | Coca Cola vs. Monster Beverage Corp | Coca Cola vs. The Select Sector | Coca Cola vs. Promotora y Operadora |
| Ameriprise Financial vs. First Majestic Silver | Ameriprise Financial vs. FibraHotel | Ameriprise Financial vs. Monster Beverage Corp | Ameriprise Financial vs. Verizon Communications |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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