Correlation Between American Axle and Noble Plc
Can any of the company-specific risk be diversified away by investing in both American Axle and Noble 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 Noble 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 Noble plc, you can compare the effects of market volatilities on American Axle and Noble 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 Noble Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Axle and Noble Plc.
Diversification Opportunities for American Axle and Noble Plc
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Noble is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and Noble plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noble 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 Noble Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noble plc has no effect on the direction of American Axle i.e., American Axle and Noble Plc go up and down completely randomly.
Pair Corralation between American Axle and Noble Plc
Considering the 90-day investment horizon American Axle Manufacturing is expected to generate 1.06 times more return on investment than Noble Plc. However, American Axle is 1.06 times more volatile than Noble plc. It trades about -0.03 of its potential returns per unit of risk. Noble plc is currently generating about -0.09 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Axle Manufacturing vs. Noble plc
Performance |
| Timeline |
| American Axle Manufa |
| Noble plc |
American Axle and Noble Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Axle and Noble Plc
The main advantage of trading using opposite American Axle and Noble Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Axle position performs unexpectedly, Noble 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 Noble Plc will offset losses from the drop in Noble Plc's long position.| American Axle vs. Lear Corporation | American Axle vs. Commercial Vehicle Group | American Axle vs. Adient PLC | American Axle vs. Gentex |
| Noble Plc vs. Seadrill Limited | Noble Plc vs. Borr Drilling | Noble Plc vs. Patterson UTI Energy | Noble Plc vs. Transocean |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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