Correlation Between Luxfer Holdings and Ameriprise Financial
Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings 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 Luxfer Holdings and Ameriprise Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luxfer Holdings PLC and Ameriprise Financial, you can compare the effects of market volatilities on Luxfer Holdings 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 Luxfer Holdings with a short position of Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and Ameriprise Financial.
Diversification Opportunities for Luxfer Holdings and Ameriprise Financial
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Luxfer and Ameriprise is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Luxfer Holdings 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 Luxfer Holdings PLC 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 Luxfer Holdings i.e., Luxfer Holdings and Ameriprise Financial go up and down completely randomly.
Pair Corralation between Luxfer Holdings and Ameriprise Financial
Given the investment horizon of 90 days Luxfer Holdings is expected to generate 1.6 times less return on investment than Ameriprise Financial. In addition to that, Luxfer Holdings is 1.45 times more volatile than Ameriprise Financial. It trades about 0.11 of its total potential returns per unit of risk. Ameriprise Financial is currently generating about 0.26 per unit of volatility. If you would invest 46,725 in Ameriprise Financial on August 28, 2024 and sell it today you would earn a total of 10,676 from holding Ameriprise Financial or generate 22.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luxfer Holdings PLC vs. Ameriprise Financial
Performance |
| Timeline |
| Luxfer Holdings PLC |
| Ameriprise Financial |
Luxfer Holdings and Ameriprise Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luxfer Holdings and Ameriprise Financial
The main advantage of trading using opposite Luxfer Holdings and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings 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.| Luxfer Holdings vs. Aquagold International | Luxfer Holdings vs. Morningstar Unconstrained Allocation | Luxfer Holdings vs. High Yield Municipal Fund | Luxfer Holdings vs. Thrivent High Yield |
| Ameriprise Financial vs. Aurora Innovation | Ameriprise Financial vs. HUMANA INC | Ameriprise Financial vs. Aquagold International | Ameriprise Financial vs. Barloworld Ltd ADR |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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