Correlation Between American Axle and Brenmiller Energy

Can any of the company-specific risk be diversified away by investing in both American Axle and Brenmiller Energy 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 Brenmiller Energy 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 Brenmiller Energy Ltd, you can compare the effects of market volatilities on American Axle and Brenmiller Energy 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 Brenmiller Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Axle and Brenmiller Energy.

Diversification Opportunities for American Axle and Brenmiller Energy

-0.32

Correlation Coefficient

American Axle  Brenmiller Energy

Very good diversification

The 3 months correlation between American and Brenmiller is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and Brenmiller Energy Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brenmiller Energy 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 Brenmiller Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brenmiller Energy has no effect on the direction of American Axle i.e., American Axle and Brenmiller Energy go up and down completely randomly.

Pair Corralation between American Axle and Brenmiller Energy

Considering the 90-day investment horizon American Axle Manufacturing is expected to under-perform the Brenmiller Energy. But the stock apears to be less risky and, when comparing its historical volatility, American Axle Manufacturing is 2.04 times less risky than Brenmiller Energy. The stock trades about -0.23 of its potential returns per unit of risk. The Brenmiller Energy Ltd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  74.00  in Brenmiller Energy Ltd on September 23, 2024 and sell it today you would earn a total of  1.00  from holding Brenmiller Energy Ltd or generate 1.35% 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.  Brenmiller Energy Ltd

American Axle Manufa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Axle Manufacturing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, American Axle is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Brenmiller Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brenmiller Energy Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with American Axle and Brenmiller Energy

The main advantage of trading using opposite American Axle and Brenmiller Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Axle position performs unexpectedly, Brenmiller Energy 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 Brenmiller Energy will offset losses from the drop in Brenmiller Energy's long position.

The idea behind American Axle Manufacturing and Brenmiller Energy Ltd 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..