Correlation Between American Axle and Stoneridge
Can any of the company-specific risk be diversified away by investing in both American Axle and Stoneridge 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 Stoneridge 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 Stoneridge, you can compare the effects of market volatilities on American Axle and Stoneridge 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 Stoneridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Axle and Stoneridge.
Diversification Opportunities for American Axle and Stoneridge
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between American and Stoneridge is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and Stoneridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stoneridge 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 Stoneridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stoneridge has no effect on the direction of American Axle i.e., American Axle and Stoneridge go up and down completely randomly.
Pair Corralation between American Axle and Stoneridge
Considering the 90-day investment horizon American Axle Manufacturing is expected to generate 0.69 times more return on investment than Stoneridge. However, American Axle Manufacturing is 1.45 times less risky than Stoneridge. It trades about -0.03 of its potential returns per unit of risk. Stoneridge is currently generating about -0.18 per unit of risk. If you would invest 745.00 in American Axle Manufacturing on August 24, 2024 and sell it today you would lose (107.00) from holding American Axle Manufacturing or give up 14.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
American Axle Manufacturing vs. Stoneridge
Performance |
| Timeline |
| American Axle Manufa |
| Stoneridge |
American Axle and Stoneridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Axle and Stoneridge
The main advantage of trading using opposite American Axle and Stoneridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Axle position performs unexpectedly, Stoneridge 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 Stoneridge will offset losses from the drop in Stoneridge's long position.| American Axle vs. Gentex | American Axle vs. Adient PLC | American Axle vs. Autoliv | American Axle vs. Fox Factory Holding |
| Stoneridge vs. Monro Muffler Brake | Stoneridge vs. Motorcar Parts of | Stoneridge vs. Standard Motor Products | Stoneridge 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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