Correlation Between American Axle and Hyliion Holdings
Can any of the company-specific risk be diversified away by investing in both American Axle and Hyliion 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 American Axle and Hyliion Holdings 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 Hyliion Holdings Corp, you can compare the effects of market volatilities on American Axle and Hyliion 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 American Axle with a short position of Hyliion Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Axle and Hyliion Holdings.
Diversification Opportunities for American Axle and Hyliion Holdings
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Hyliion is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and Hyliion Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyliion Holdings Corp 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 Hyliion Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyliion Holdings Corp has no effect on the direction of American Axle i.e., American Axle and Hyliion Holdings go up and down completely randomly.
Pair Corralation between American Axle and Hyliion Holdings
Considering the 90-day investment horizon American Axle is expected to generate 5.11 times less return on investment than Hyliion Holdings. But when comparing it to its historical volatility, American Axle Manufacturing is 2.39 times less risky than Hyliion Holdings. It trades about 0.13 of its potential returns per unit of risk. Hyliion Holdings Corp is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 256.00 in Hyliion Holdings Corp on August 28, 2024 and sell it today you would earn a total of 126.00 from holding Hyliion Holdings Corp or generate 49.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Axle Manufacturing vs. Hyliion Holdings Corp
Performance |
| Timeline |
| American Axle Manufa |
| Hyliion Holdings Corp |
American Axle and Hyliion Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Axle and Hyliion Holdings
The main advantage of trading using opposite American Axle and Hyliion Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Axle position performs unexpectedly, Hyliion 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 Hyliion Holdings will offset losses from the drop in Hyliion Holdings' long position.| American Axle vs. Lear Corporation | American Axle vs. Commercial Vehicle Group | American Axle vs. Adient PLC | American Axle vs. Gentex |
| Hyliion Holdings vs. Quantumscape Corp | Hyliion Holdings vs. Mobileye Global Class | Hyliion Holdings vs. Innoviz Technologies | Hyliion Holdings vs. Aeva Technologies |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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