Correlation Between American Axle and Miller Industries
Can any of the company-specific risk be diversified away by investing in both American Axle and Miller Industries 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 Miller Industries 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 Miller Industries, you can compare the effects of market volatilities on American Axle and Miller Industries 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 Miller Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Axle and Miller Industries.
Diversification Opportunities for American Axle and Miller Industries
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Miller is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and Miller Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miller Industries 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 Miller Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miller Industries has no effect on the direction of American Axle i.e., American Axle and Miller Industries go up and down completely randomly.
Pair Corralation between American Axle and Miller Industries
Considering the 90-day investment horizon American Axle Manufacturing is expected to generate 0.81 times more return on investment than Miller Industries. However, American Axle Manufacturing is 1.23 times less risky than Miller Industries. It trades about 0.24 of its potential returns per unit of risk. Miller Industries is currently generating about 0.15 per unit of risk. If you would invest 581.00 in American Axle Manufacturing on August 31, 2024 and sell it today you would earn a total of 89.00 from holding American Axle Manufacturing or generate 15.32% 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. Miller Industries
Performance |
| Timeline |
| American Axle Manufa |
| Miller Industries |
American Axle and Miller Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Axle and Miller Industries
The main advantage of trading using opposite American Axle and Miller Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Axle position performs unexpectedly, Miller Industries 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 Miller Industries will offset losses from the drop in Miller Industries' long position.| American Axle vs. Gentex | American Axle vs. Adient PLC | American Axle vs. Autoliv | American Axle vs. Fox Factory Holding |
| Miller Industries vs. Dorman Products | Miller Industries vs. Standard Motor Products | Miller Industries vs. Motorcar Parts of | Miller Industries vs. Douglas Dynamics |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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