Correlation Between American Axle and Enlight Renewable

Specify exactly 2 symbols:
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 Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

American Axle Manufacturing  vs.  Enlight Renewable Energy

 Performance 
       Timeline  
American Axle Manufa 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Enlight Renewable Energy 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Enlight Renewable Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Enlight Renewable is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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.
The idea behind American Axle Manufacturing and Enlight Renewable Energy 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.
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