Correlation Between State Street and Ameriprise Financial
Can any of the company-specific risk be diversified away by investing in both State Street 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 State Street and Ameriprise Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street and Ameriprise Financial, you can compare the effects of market volatilities on State Street 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 State Street with a short position of Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Ameriprise Financial.
Diversification Opportunities for State Street and Ameriprise Financial
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between State and Ameriprise is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding State Street and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and State Street 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 State Street 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 State Street i.e., State Street and Ameriprise Financial go up and down completely randomly.
Pair Corralation between State Street and Ameriprise Financial
Assuming the 90 days horizon State Street is expected to generate 1.58 times less return on investment than Ameriprise Financial. In addition to that, State Street is 1.1 times more volatile than Ameriprise Financial. It trades about 0.05 of its total potential returns per unit of risk. Ameriprise Financial is currently generating about 0.09 per unit of volatility. If you would invest 29,507 in Ameriprise Financial on August 28, 2024 and sell it today you would earn a total of 24,733 from holding Ameriprise Financial or generate 83.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street vs. Ameriprise Financial
Performance |
| Timeline |
| State Street |
| Ameriprise Financial |
State Street and Ameriprise Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Ameriprise Financial
The main advantage of trading using opposite State Street and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street 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.| State Street vs. The Bank of | State Street vs. Superior Plus Corp | State Street vs. NMI Holdings | State Street vs. Origin Agritech |
| Ameriprise Financial vs. The Bank of | Ameriprise Financial vs. Superior Plus Corp | Ameriprise Financial vs. NMI Holdings | Ameriprise Financial vs. Origin Agritech |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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