Correlation Between American Axle and Highest Performances
Can any of the company-specific risk be diversified away by investing in both American Axle and Highest Performances 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 Highest Performances 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 Highest Performances Holdings, you can compare the effects of market volatilities on American Axle and Highest Performances 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 Highest Performances. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Axle and Highest Performances.
Diversification Opportunities for American Axle and Highest Performances
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Highest is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and Highest Performances Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highest Performances 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 Highest Performances. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highest Performances has no effect on the direction of American Axle i.e., American Axle and Highest Performances go up and down completely randomly.
Pair Corralation between American Axle and Highest Performances
Considering the 90-day investment horizon American Axle Manufacturing is expected to under-perform the Highest Performances. But the stock apears to be less risky and, when comparing its historical volatility, American Axle Manufacturing is 3.04 times less risky than Highest Performances. The stock trades about -0.35 of its potential returns per unit of risk. The Highest Performances Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 34.00 in Highest Performances Holdings on October 7, 2024 and sell it today you would earn a total of 2.00 from holding Highest Performances Holdings or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Axle Manufacturing vs. Highest Performances Holdings
Performance |
| Timeline |
| American Axle Manufa |
| Highest Performances |
American Axle and Highest Performances Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Axle and Highest Performances
The main advantage of trading using opposite American Axle and Highest Performances positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Axle position performs unexpectedly, Highest Performances 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 Highest Performances will offset losses from the drop in Highest Performances' long position.| American Axle vs. Lear Corporation | American Axle vs. Commercial Vehicle Group | American Axle vs. Adient PLC | American Axle vs. Gentex |
| Highest Performances vs. Primoris Services | Highest Performances vs. Cementos Pacasmayo SAA | Highest Performances vs. Conifer Holdings, 975 | Highest Performances vs. EMCOR Group |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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