Correlation Between American Axle and World Kinect
Can any of the company-specific risk be diversified away by investing in both American Axle and World Kinect 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 World Kinect 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 World Kinect, you can compare the effects of market volatilities on American Axle and World Kinect 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 World Kinect. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Axle and World Kinect.
Diversification Opportunities for American Axle and World Kinect
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and World is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and World Kinect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Kinect 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 World Kinect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Kinect has no effect on the direction of American Axle i.e., American Axle and World Kinect go up and down completely randomly.
Pair Corralation between American Axle and World Kinect
Considering the 90-day investment horizon American Axle Manufacturing is expected to generate 1.68 times more return on investment than World Kinect. However, American Axle is 1.68 times more volatile than World Kinect. It trades about 0.24 of its potential returns per unit of risk. World Kinect is currently generating about 0.27 per unit of risk. If you would invest 576.00 in American Axle Manufacturing on September 2, 2024 and sell it today you would earn a total of 85.00 from holding American Axle Manufacturing or generate 14.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Axle Manufacturing vs. World Kinect
Performance |
| Timeline |
| American Axle Manufa |
| World Kinect |
American Axle and World Kinect Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Axle and World Kinect
The main advantage of trading using opposite American Axle and World Kinect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Axle position performs unexpectedly, World Kinect 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 World Kinect will offset losses from the drop in World Kinect's long position.| American Axle vs. Ford Motor | American Axle vs. General Motors | American Axle vs. Goodyear Tire Rubber | American Axle vs. Li Auto |
| World Kinect vs. Tesla Inc | World Kinect vs. American Axle Manufacturing | World Kinect vs. Life Time Group | World Kinect vs. Emerson Radio |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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