Correlation Between Ameriprise Financial and AGF Management

Can any of the company-specific risk be diversified away by investing in both Ameriprise Financial and AGF Management 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 Ameriprise Financial and AGF Management into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ameriprise Financial and AGF Management Limited, you can compare the effects of market volatilities on Ameriprise Financial and AGF Management 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 Ameriprise Financial with a short position of AGF Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameriprise Financial and AGF Management.

Diversification Opportunities for Ameriprise Financial and AGF Management

0.71

Correlation Coefficient

Ameriprise Financial  AGF Management

Poor diversification

The 3 months correlation between Ameriprise and AGF is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management and Ameriprise Financial 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 Ameriprise Financial are associated (or correlated) with AGF Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF Management has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and AGF Management go up and down completely randomly.

Pair Corralation between Ameriprise Financial and AGF Management

Assuming the 90 days horizon Ameriprise Financial is expected to generate 0.52 times more return on investment than AGF Management. However, Ameriprise Financial is 1.91 times less risky than AGF Management. It trades about 0.16 of its potential returns per unit of risk. AGF Management Limited is currently generating about 0.08 per unit of risk. If you would invest  36,709  in Ameriprise Financial on February 15, 2024 and sell it today you would earn a total of  3,511  from holding Ameriprise Financial or generate 9.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Ameriprise Financial  vs.  AGF Management Limited

Ameriprise Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ameriprise Financial may actually be approaching a critical reversion point that can send shares even higher in June 2024.

AGF Management

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AGF Management Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AGF Management may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Ameriprise Financial and AGF Management

The main advantage of trading using opposite Ameriprise Financial and AGF Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameriprise Financial position performs unexpectedly, AGF Management 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 AGF Management will offset losses from the drop in AGF Management's long position.

The idea behind Ameriprise Financial and AGF Management Limited 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.