Correlation Between American Axle and Tesla
Can any of the company-specific risk be diversified away by investing in both American Axle and Tesla 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 Tesla 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 Tesla Inc, you can compare the effects of market volatilities on American Axle and Tesla 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 Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Axle and Tesla.
Diversification Opportunities for American Axle and Tesla
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Tesla is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc 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 Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of American Axle i.e., American Axle and Tesla go up and down completely randomly.
Pair Corralation between American Axle and Tesla
Considering the 90-day investment horizon American Axle Manufacturing is expected to under-perform the Tesla. But the stock apears to be less risky and, when comparing its historical volatility, American Axle Manufacturing is 1.3 times less risky than Tesla. The stock trades about -0.01 of its potential returns per unit of risk. The Tesla Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 18,451 in Tesla Inc on November 27, 2024 and sell it today you would earn a total of 15,329 from holding Tesla Inc or generate 83.08% 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. Tesla Inc
Performance |
| Timeline |
| American Axle Manufa |
| Tesla Inc |
American Axle and Tesla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Axle and Tesla
The main advantage of trading using opposite American Axle and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Axle position performs unexpectedly, Tesla 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 Tesla will offset losses from the drop in Tesla's 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |