Correlation Between American Axle and 126307AY3

Can any of the company-specific risk be diversified away by investing in both American Axle and 126307AY3 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 126307AY3 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 CSC Holdings 75, you can compare the effects of market volatilities on American Axle and 126307AY3 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 126307AY3. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Axle and 126307AY3.

Diversification Opportunities for American Axle and 126307AY3

-0.01

Correlation Coefficient

American Axle  126307AY3

Good diversification

The 3 months correlation between American and 126307AY3 is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and CSC Holdings 75 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSC Holdings 75 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 126307AY3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSC Holdings 75 has no effect on the direction of American Axle i.e., American Axle and 126307AY3 go up and down completely randomly.

Pair Corralation between American Axle and 126307AY3

Considering the 90-day investment horizon American Axle is expected to generate 1.13 times less return on investment than 126307AY3. In addition to that, American Axle is 1.06 times more volatile than CSC Holdings 75. It trades about 0.08 of its total potential returns per unit of risk. CSC Holdings 75 is currently generating about 0.09 per unit of volatility. If you would invest  5,775  in CSC Holdings 75 on September 5, 2024 and sell it today you would earn a total of  620.00  from holding CSC Holdings 75 or generate 10.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.25%
Values	Daily Returns

American Axle Manufacturing  vs.  CSC Holdings 75

American Axle Manufa

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in American Axle Manufacturing are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, American Axle disclosed solid returns over the last few months and may actually be approaching a breakup point.

CSC Holdings 75

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CSC Holdings 75 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 126307AY3 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Axle and 126307AY3

The main advantage of trading using opposite American Axle and 126307AY3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Axle position performs unexpectedly, 126307AY3 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 126307AY3 will offset losses from the drop in 126307AY3's long position.

The idea behind American Axle Manufacturing and CSC Holdings 75 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.