Correlation Between American Axle and NH Foods
Can any of the company-specific risk be diversified away by investing in both American Axle and NH Foods 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 NH Foods 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 NH Foods Ltd, you can compare the effects of market volatilities on American Axle and NH Foods 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 NH Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Axle and NH Foods.
Diversification Opportunities for American Axle and NH Foods
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and NIPMY is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and NH Foods Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH Foods 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 NH Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH Foods has no effect on the direction of American Axle i.e., American Axle and NH Foods go up and down completely randomly.
Pair Corralation between American Axle and NH Foods
Considering the 90-day investment horizon American Axle Manufacturing is expected to under-perform the NH Foods. In addition to that, American Axle is 6.77 times more volatile than NH Foods Ltd. It trades about -0.01 of its total potential returns per unit of risk. NH Foods Ltd is currently generating about 0.06 per unit of volatility. If you would invest 1,509 in NH Foods Ltd on November 27, 2024 and sell it today you would earn a total of 191.00 from holding NH Foods Ltd or generate 12.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Axle Manufacturing vs. NH Foods Ltd
Performance |
| Timeline |
| American Axle Manufa |
| NH Foods |
American Axle and NH Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Axle and NH Foods
The main advantage of trading using opposite American Axle and NH Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Axle position performs unexpectedly, NH Foods 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 NH Foods will offset losses from the drop in NH Foods' long position.| American Axle vs. Lear Corporation | American Axle vs. Commercial Vehicle Group | American Axle vs. Adient PLC | American Axle vs. Gentex |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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