Correlation Between American Axle and Enlight Renewable
Can any of the company-specific risk be diversified away by investing in both American Axle and Enlight Renewable 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 Enlight Renewable 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 Enlight Renewable Energy, you can compare the effects of market volatilities on American Axle and Enlight Renewable 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 Enlight Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Axle and Enlight Renewable.
Diversification Opportunities for American Axle and Enlight Renewable
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Enlight is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and Enlight Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlight Renewable 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 Enlight Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enlight Renewable Energy has no effect on the direction of American Axle i.e., American Axle and Enlight Renewable go up and down completely randomly.
Pair Corralation between American Axle and Enlight Renewable
Considering the 90-day investment horizon American Axle Manufacturing is expected to under-perform the Enlight Renewable. But the stock apears to be less risky and, when comparing its historical volatility, American Axle Manufacturing is 1.03 times less risky than Enlight Renewable. The stock trades about -0.05 of its potential returns per unit of risk. The Enlight Renewable Energy is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,621 in Enlight Renewable Energy on September 24, 2024 and sell it today you would lose (40.00) from holding Enlight Renewable Energy or give up 2.47% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
American Axle Manufacturing vs. Enlight Renewable Energy
Performance |
Timeline |
American Axle Manufa |
Enlight Renewable Energy |
American Axle and Enlight Renewable Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Axle and Enlight Renewable
The main advantage of trading using opposite American Axle and Enlight Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Axle position performs unexpectedly, Enlight Renewable 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 Enlight Renewable will offset losses from the drop in Enlight Renewable's long position.American Axle vs. Ford Motor | American Axle vs. General Motors | American Axle vs. Goodyear Tire Rubber | American Axle vs. Li Auto |
Enlight Renewable vs. Verde Clean Fuels | Enlight Renewable vs. ReNew Energy Global | Enlight Renewable vs. Ellomay Capital | Enlight Renewable vs. Eco Wave Power |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |