Correlation Between American Axle and Sweetgreen
Can any of the company-specific risk be diversified away by investing in both American Axle and Sweetgreen 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 Sweetgreen 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 Sweetgreen, you can compare the effects of market volatilities on American Axle and Sweetgreen 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 Sweetgreen. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Axle and Sweetgreen.
Diversification Opportunities for American Axle and Sweetgreen
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Sweetgreen is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and Sweetgreen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sweetgreen 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 Sweetgreen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sweetgreen has no effect on the direction of American Axle i.e., American Axle and Sweetgreen go up and down completely randomly.
Pair Corralation between American Axle and Sweetgreen
Considering the 90-day investment horizon American Axle Manufacturing is expected to generate 1.01 times more return on investment than Sweetgreen. However, American Axle is 1.01 times more volatile than Sweetgreen. It trades about -0.08 of its potential returns per unit of risk. Sweetgreen is currently generating about -0.24 per unit of risk. If you would invest 585.00 in American Axle Manufacturing on November 28, 2024 and sell it today you would lose (56.00) from holding American Axle Manufacturing or give up 9.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Axle Manufacturing vs. Sweetgreen
Performance |
| Timeline |
| American Axle Manufa |
| Sweetgreen |
American Axle and Sweetgreen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Axle and Sweetgreen
The main advantage of trading using opposite American Axle and Sweetgreen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Axle position performs unexpectedly, Sweetgreen 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 Sweetgreen will offset losses from the drop in Sweetgreen's long position.| American Axle vs. Lear Corporation | American Axle vs. Commercial Vehicle Group | American Axle vs. Adient PLC | American Axle vs. Gentex |
| Sweetgreen vs. Cannae Holdings | Sweetgreen vs. Brinker International | Sweetgreen vs. Jack In The | Sweetgreen vs. Biglari Holdings |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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