Correlation Between American Axle and Sypris Solutions
Can any of the company-specific risk be diversified away by investing in both American Axle and Sypris Solutions 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 Sypris Solutions 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 Sypris Solutions, you can compare the effects of market volatilities on American Axle and Sypris Solutions 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 Sypris Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Axle and Sypris Solutions.
Diversification Opportunities for American Axle and Sypris Solutions
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Sypris is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and Sypris Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sypris Solutions 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 Sypris Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sypris Solutions has no effect on the direction of American Axle i.e., American Axle and Sypris Solutions go up and down completely randomly.
Pair Corralation between American Axle and Sypris Solutions
Considering the 90-day investment horizon American Axle Manufacturing is expected to generate 1.46 times more return on investment than Sypris Solutions. However, American Axle is 1.46 times more volatile than Sypris Solutions. It trades about 0.24 of its potential returns per unit of risk. Sypris Solutions is currently generating about 0.3 per unit of risk. If you would invest 581.00 in American Axle Manufacturing on August 31, 2024 and sell it today you would earn a total of 89.00 from holding American Axle Manufacturing or generate 15.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Axle Manufacturing vs. Sypris Solutions
Performance |
| Timeline |
| American Axle Manufa |
| Sypris Solutions |
American Axle and Sypris Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Axle and Sypris Solutions
The main advantage of trading using opposite American Axle and Sypris Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Axle position performs unexpectedly, Sypris Solutions 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 Sypris Solutions will offset losses from the drop in Sypris Solutions' long position.| American Axle vs. Gentex | American Axle vs. Adient PLC | American Axle vs. Autoliv | American Axle vs. Fox Factory Holding |
| Sypris Solutions vs. Monro Muffler Brake | Sypris Solutions vs. Magna International | Sypris Solutions vs. BorgWarner | Sypris Solutions vs. Mobileye Global Class |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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