Correlation Between American Axle and Aptiv PLC
Can any of the company-specific risk be diversified away by investing in both American Axle and Aptiv PLC 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 American Axle and Aptiv PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Axle Manufacturing and Aptiv PLC, you can compare the effects of market volatilities on American Axle and Aptiv PLC 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 American Axle with a short position of Aptiv PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Axle and Aptiv PLC.
Diversification Opportunities for American Axle and Aptiv PLC
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Aptiv is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and Aptiv PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptiv PLC and American Axle 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 American Axle Manufacturing are associated (or correlated) with Aptiv PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptiv PLC has no effect on the direction of American Axle i.e., American Axle and Aptiv PLC go up and down completely randomly.
Pair Corralation between American Axle and Aptiv PLC
Considering the 90-day investment horizon American Axle Manufacturing is expected to generate 0.98 times more return on investment than Aptiv PLC. However, American Axle Manufacturing is 1.02 times less risky than Aptiv PLC. It trades about -0.03 of its potential returns per unit of risk. Aptiv PLC is currently generating about -0.11 per unit of risk. If you would invest 764.00 in American Axle Manufacturing on August 29, 2024 and sell it today you would lose (94.00) from holding American Axle Manufacturing or give up 12.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Axle Manufacturing vs. Aptiv PLC
Performance |
| Timeline |
| American Axle Manufa |
| Aptiv PLC |
American Axle and Aptiv PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Axle and Aptiv PLC
The main advantage of trading using opposite American Axle and Aptiv PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Axle position performs unexpectedly, Aptiv PLC 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 Aptiv PLC will offset losses from the drop in Aptiv PLC's long position.| American Axle vs. Lear Corporation | American Axle vs. Commercial Vehicle Group | American Axle vs. Adient PLC | American Axle vs. Gentex |
| Aptiv PLC vs. Allison Transmission Holdings | Aptiv PLC vs. LKQ Corporation | Aptiv PLC vs. Lear Corporation | Aptiv PLC vs. Magna International |
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 Stocks Directory module to find actively traded stocks across global markets.
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