Correlation Between Weyco and American Axle
Can any of the company-specific risk be diversified away by investing in both Weyco and American Axle 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 Weyco and American Axle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weyco Group and American Axle Manufacturing, you can compare the effects of market volatilities on Weyco and American Axle 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 Weyco with a short position of American Axle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weyco and American Axle.
Diversification Opportunities for Weyco and American Axle
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Weyco and American is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Weyco Group and American Axle Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Axle Manufa and Weyco 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 Weyco Group are associated (or correlated) with American Axle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Axle Manufa has no effect on the direction of Weyco i.e., Weyco and American Axle go up and down completely randomly.
Pair Corralation between Weyco and American Axle
Given the investment horizon of 90 days Weyco Group is expected to generate 1.18 times more return on investment than American Axle. However, Weyco is 1.18 times more volatile than American Axle Manufacturing. It trades about 0.06 of its potential returns per unit of risk. American Axle Manufacturing is currently generating about 0.03 per unit of risk. If you would invest 3,318 in Weyco Group on August 29, 2024 and sell it today you would earn a total of 300.00 from holding Weyco Group or generate 9.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weyco Group vs. American Axle Manufacturing
Performance |
| Timeline |
| Weyco Group |
| American Axle Manufa |
Weyco and American Axle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weyco and American Axle
The main advantage of trading using opposite Weyco and American Axle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyco position performs unexpectedly, American Axle 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 American Axle will offset losses from the drop in American Axle's long position.The idea behind Weyco Group and American Axle Manufacturing pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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