Correlation Between United Parcel and Ameriprise Financial
Can any of the company-specific risk be diversified away by investing in both United Parcel 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 United Parcel and Ameriprise Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Parcel Service and Ameriprise Financial, you can compare the effects of market volatilities on United Parcel 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 United Parcel with a short position of Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Parcel and Ameriprise Financial.
Diversification Opportunities for United Parcel and Ameriprise Financial
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Ameriprise is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding United Parcel Service and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and United Parcel 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 United Parcel Service 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 United Parcel i.e., United Parcel and Ameriprise Financial go up and down completely randomly.
Pair Corralation between United Parcel and Ameriprise Financial
Assuming the 90 days trading horizon United Parcel Service is expected to under-perform the Ameriprise Financial. But the stock apears to be less risky and, when comparing its historical volatility, United Parcel Service is 3.44 times less risky than Ameriprise Financial. The stock trades about -0.08 of its potential returns per unit of risk. The Ameriprise Financial is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 928,889 in Ameriprise Financial on September 14, 2024 and sell it today you would earn a total of 171,588 from holding Ameriprise Financial or generate 18.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Parcel Service vs. Ameriprise Financial
Performance |
| Timeline |
| United Parcel Service |
| Ameriprise Financial |
United Parcel and Ameriprise Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Parcel and Ameriprise Financial
The main advantage of trading using opposite United Parcel and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Parcel 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.| United Parcel vs. Ameriprise Financial | United Parcel vs. Southern Copper | United Parcel vs. Lloyds Banking Group | United Parcel vs. Martin Marietta Materials |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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