Correlation Between American Axle and Gogoro
Can any of the company-specific risk be diversified away by investing in both American Axle and Gogoro 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 Gogoro 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 Gogoro Inc, you can compare the effects of market volatilities on American Axle and Gogoro 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 Gogoro. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Axle and Gogoro.
Diversification Opportunities for American Axle and Gogoro
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Gogoro is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and Gogoro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gogoro Inc 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 Gogoro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gogoro Inc has no effect on the direction of American Axle i.e., American Axle and Gogoro go up and down completely randomly.
Pair Corralation between American Axle and Gogoro
Considering the 90-day investment horizon American Axle Manufacturing is expected to generate 1.02 times more return on investment than Gogoro. However, American Axle is 1.02 times more volatile than Gogoro Inc. It trades about -0.13 of its potential returns per unit of risk. Gogoro Inc is currently generating about -0.21 per unit of risk. If you would invest 578.00 in American Axle Manufacturing on December 28, 2024 and sell it today you would lose (147.00) from holding American Axle Manufacturing or give up 25.43% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
American Axle Manufacturing vs. Gogoro Inc
Performance |
Timeline |
American Axle Manufa |
Gogoro Inc |
American Axle and Gogoro Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Axle and Gogoro
The main advantage of trading using opposite American Axle and Gogoro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Axle position performs unexpectedly, Gogoro 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 Gogoro will offset losses from the drop in Gogoro's long position.American Axle vs. Lear Corporation | American Axle vs. Commercial Vehicle Group | American Axle vs. Adient PLC | American Axle vs. Gentex |
Gogoro vs. Motorcar Parts of | Gogoro vs. Stoneridge | Gogoro vs. Superior Industries International | Gogoro vs. Lear Corporation |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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