Correlation Between National Bank and Ameriprise Financial
Can any of the company-specific risk be diversified away by investing in both National Bank 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 National Bank and Ameriprise Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank Holdings and Ameriprise Financial, you can compare the effects of market volatilities on National Bank 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 National Bank with a short position of Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Ameriprise Financial.
Diversification Opportunities for National Bank and Ameriprise Financial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between National and Ameriprise is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and National Bank 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 National Bank Holdings 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 National Bank i.e., National Bank and Ameriprise Financial go up and down completely randomly.
Pair Corralation between National Bank and Ameriprise Financial
Assuming the 90 days horizon National Bank is expected to generate 1.26 times less return on investment than Ameriprise Financial. In addition to that, National Bank is 1.07 times more volatile than Ameriprise Financial. It trades about 0.17 of its total potential returns per unit of risk. Ameriprise Financial is currently generating about 0.23 per unit of volatility. If you would invest 47,130 in Ameriprise Financial on August 27, 2024 and sell it today you would earn a total of 7,110 from holding Ameriprise Financial or generate 15.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank Holdings vs. Ameriprise Financial
Performance |
| Timeline |
| National Bank Holdings |
| Ameriprise Financial |
National Bank and Ameriprise Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Ameriprise Financial
The main advantage of trading using opposite National Bank and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank 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.| National Bank vs. Superior Plus Corp | National Bank vs. NMI Holdings | National Bank vs. Origin Agritech | National Bank vs. SIVERS SEMICONDUCTORS AB |
| Ameriprise Financial vs. MAGNUM MINING EXP | Ameriprise Financial vs. Evolution Mining Limited | Ameriprise Financial vs. MINCO SILVER | Ameriprise Financial vs. Perseus Mining Limited |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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