Correlation Between Ameriprise Financial and OneMain Holdings

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

By analyzing existing cross correlation between Ameriprise Financial and OneMain Holdings, you can compare the effects of market volatilities on Ameriprise Financial and OneMain Holdings 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 OneMain Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameriprise Financial and OneMain Holdings.

Diversification Opportunities for Ameriprise Financial and OneMain Holdings

0.19

Correlation Coefficient

Ameriprise Financial  OneMain Holdings

Average diversification

The 3 months correlation between Ameriprise and OneMain is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and OneMain Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OneMain Holdings 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 OneMain Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OneMain Holdings has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and OneMain Holdings go up and down completely randomly.

Pair Corralation between Ameriprise Financial and OneMain Holdings

Considering the 90-day investment horizon Ameriprise Financial is expected to generate 0.77 times more return on investment than OneMain Holdings. However, Ameriprise Financial is 1.31 times less risky than OneMain Holdings. It trades about 0.05 of its potential returns per unit of risk. OneMain Holdings is currently generating about -0.02 per unit of risk. If you would invest  41,278  in Ameriprise Financial on March 7, 2024 and sell it today you would earn a total of  1,177  from holding Ameriprise Financial or generate 2.85% return on investment over 90 days.

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

Ameriprise Financial  vs.  OneMain Holdings

Ameriprise Financial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable primary indicators, Ameriprise Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

OneMain Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OneMain Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, OneMain Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ameriprise Financial and OneMain Holdings

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

The idea behind Ameriprise Financial and OneMain Holdings 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.