Correlation Between American Axle and Vast Renewables
Can any of the company-specific risk be diversified away by investing in both American Axle and Vast Renewables 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 Vast Renewables 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 Vast Renewables Limited, you can compare the effects of market volatilities on American Axle and Vast Renewables 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 Vast Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Axle and Vast Renewables.
Diversification Opportunities for American Axle and Vast Renewables
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Vast is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and Vast Renewables Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vast Renewables 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 Vast Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vast Renewables has no effect on the direction of American Axle i.e., American Axle and Vast Renewables go up and down completely randomly.
Pair Corralation between American Axle and Vast Renewables
Considering the 90-day investment horizon American Axle Manufacturing is expected to generate 0.26 times more return on investment than Vast Renewables. However, American Axle Manufacturing is 3.87 times less risky than Vast Renewables. It trades about -0.08 of its potential returns per unit of risk. Vast Renewables Limited is currently generating about -0.06 per unit of risk. If you would invest 576.00 in American Axle Manufacturing on December 2, 2024 and sell it today you would lose (80.00) from holding American Axle Manufacturing or give up 13.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Axle Manufacturing vs. Vast Renewables Limited
Performance |
| Timeline |
| American Axle Manufa |
| Vast Renewables |
American Axle and Vast Renewables Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Axle and Vast Renewables
The main advantage of trading using opposite American Axle and Vast Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Axle position performs unexpectedly, Vast Renewables 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 Vast Renewables will offset losses from the drop in Vast Renewables' long position.| American Axle vs. Lear Corporation | American Axle vs. Commercial Vehicle Group | American Axle vs. Adient PLC | American Axle vs. Gentex |
| Vast Renewables vs. Titan America SA | Vast Renewables vs. BJs Restaurants | Vast Renewables vs. ioneer Ltd American | Vast Renewables vs. Chipotle Mexican Grill |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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