Correlation Between Scales and Ameriprise Financial

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

Diversification Opportunities for Scales and Ameriprise Financial

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Scales and Ameriprise is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Scales Limited and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Scales 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 Scales Limited 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 Scales i.e., Scales and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Scales and Ameriprise Financial

Assuming the 90 days horizon Scales Limited is expected to under-perform the Ameriprise Financial. In addition to that, Scales is 2.22 times more volatile than Ameriprise Financial. It trades about -0.09 of its total potential returns per unit of risk. Ameriprise Financial is currently generating about -0.11 per unit of volatility. If you would invest  52,840  in Ameriprise Financial on September 12, 2024 and sell it today you would lose (1,100) from holding Ameriprise Financial or give up 2.08% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy95.65%
ValuesDaily Returns

Scales Limited  vs.  Ameriprise Financial

 Performance 
       Timeline  
Scales Limited 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Scales Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Scales may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Ameriprise Financial 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ameriprise Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Scales and Ameriprise Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Scales and Ameriprise Financial

The main advantage of trading using opposite Scales and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scales 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 Scales Limited 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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