Correlation Between American Axle and Optec International
Can any of the company-specific risk be diversified away by investing in both American Axle and Optec International 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 Optec International 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 Optec International, you can compare the effects of market volatilities on American Axle and Optec International 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 Optec International. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Axle and Optec International.
Diversification Opportunities for American Axle and Optec International
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Optec is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and Optec International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optec International 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 Optec International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optec International has no effect on the direction of American Axle i.e., American Axle and Optec International go up and down completely randomly.
Pair Corralation between American Axle and Optec International
If you would invest 611.00 in American Axle Manufacturing on August 30, 2024 and sell it today you would earn a total of 59.00 from holding American Axle Manufacturing or generate 9.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
American Axle Manufacturing vs. Optec International
Performance |
| Timeline |
| American Axle Manufa |
| Optec International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Axle and Optec International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Axle and Optec International
The main advantage of trading using opposite American Axle and Optec International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Axle position performs unexpectedly, Optec International 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 Optec International will offset losses from the drop in Optec International's long position.| American Axle vs. Lear Corporation | American Axle vs. Commercial Vehicle Group | American Axle vs. Adient PLC | American Axle vs. Gentex |
| Optec International vs. Service Team | Optec International vs. American Axle Manufacturing | Optec International vs. Modine Manufacturing | Optec International vs. Aeye Inc |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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