Correlation Between American Axle and Mobileye Global
Can any of the company-specific risk be diversified away by investing in both American Axle and Mobileye Global 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 Mobileye Global 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 Mobileye Global Class, you can compare the effects of market volatilities on American Axle and Mobileye Global 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 Mobileye Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Axle and Mobileye Global.
Diversification Opportunities for American Axle and Mobileye Global
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Mobileye is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and Mobileye Global Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobileye Global Class 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 Mobileye Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobileye Global Class has no effect on the direction of American Axle i.e., American Axle and Mobileye Global go up and down completely randomly.
Pair Corralation between American Axle and Mobileye Global
Considering the 90-day investment horizon American Axle is expected to generate 4.12 times less return on investment than Mobileye Global. But when comparing it to its historical volatility, American Axle Manufacturing is 1.8 times less risky than Mobileye Global. It trades about 0.13 of its potential returns per unit of risk. Mobileye Global Class is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,267 in Mobileye Global Class on August 26, 2024 and sell it today you would earn a total of 530.00 from holding Mobileye Global Class or generate 41.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Axle Manufacturing vs. Mobileye Global Class
Performance |
| Timeline |
| American Axle Manufa |
| Mobileye Global Class |
American Axle and Mobileye Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Axle and Mobileye Global
The main advantage of trading using opposite American Axle and Mobileye Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Axle position performs unexpectedly, Mobileye Global 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 Mobileye Global will offset losses from the drop in Mobileye Global's long position.The idea behind American Axle Manufacturing and Mobileye Global Class 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.| Mobileye Global vs. Quantumscape Corp | Mobileye Global vs. Innoviz Technologies | Mobileye Global vs. Aeva Technologies | Mobileye Global vs. Hyliion Holdings Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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