Correlation Between American Axle and Getty Images

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

Diversification Opportunities for American Axle and Getty Images

0.05

Correlation Coefficient

American Axle  Getty Images

Significant diversification

The 3 months correlation between American and Getty is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and Getty Images Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Getty Images Holdings 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 Getty Images. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Getty Images Holdings has no effect on the direction of American Axle i.e., American Axle and Getty Images go up and down completely randomly.

Pair Corralation between American Axle and Getty Images

Considering the 90-day investment horizon American Axle Manufacturing is expected to generate 0.57 times more return on investment than Getty Images. However, American Axle Manufacturing is 1.75 times less risky than Getty Images. It trades about -0.05 of its potential returns per unit of risk. Getty Images Holdings is currently generating about -0.03 per unit of risk. If you would invest  723.00  in American Axle Manufacturing on October 20, 2024 and sell it today you would lose (134.00) from holding American Axle Manufacturing or give up 18.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

American Axle Manufacturing  vs.  Getty Images Holdings

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.

Getty Images Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Getty Images Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with American Axle and Getty Images

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

The idea behind American Axle Manufacturing and Getty Images Holdings 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.