Correlation Between Ameriprise Financial and Franklin Resources

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

Diversification Opportunities for Ameriprise Financial and Franklin Resources

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Ameriprise and Franklin is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial Services and Franklin Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Resources 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 Services are associated (or correlated) with Franklin Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Resources has no effect on the direction of Ameriprise Financial i.e., Ameriprise Financial and Franklin Resources go up and down completely randomly.

Pair Corralation between Ameriprise Financial and Franklin Resources

Considering the 90-day investment horizon Ameriprise Financial Services is expected to generate 0.83 times more return on investment than Franklin Resources. However, Ameriprise Financial Services is 1.21 times less risky than Franklin Resources. It trades about -0.16 of its potential returns per unit of risk. Franklin Resources is currently generating about -0.37 per unit of risk. If you would invest  26,918  in Ameriprise Financial Services on July 3, 2022 and sell it today you would lose (1,723)  from holding Ameriprise Financial Services or give up 6.4% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Ameriprise Financial Services  vs.  Franklin Resources

 Performance (%) 
       Timeline  
Ameriprise Financial 
Ameriprise Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial Services are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Ameriprise Financial may actually be approaching a critical reversion point that can send shares even higher in November 2022.

Ameriprise Price Channel

Franklin Resources 
Franklin Performance
0 of 100
Over the last 90 days Franklin Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Franklin Price Channel

Ameriprise Financial and Franklin Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ameriprise Financial and Franklin Resources

The main advantage of trading using opposite Ameriprise Financial and Franklin Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameriprise Financial position performs unexpectedly, Franklin Resources 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 Franklin Resources will offset losses from the drop in Franklin Resources' long position.
Ameriprise Financial vs. Boeing Company
The idea behind Ameriprise Financial Services and Franklin Resources 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.
Franklin Resources vs. Boeing Company
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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