Correlation Between American Axle and Sonos
Can any of the company-specific risk be diversified away by investing in both American Axle and Sonos 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 Sonos 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 Sonos Inc, you can compare the effects of market volatilities on American Axle and Sonos 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 Sonos. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Axle and Sonos.
Diversification Opportunities for American Axle and Sonos
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Sonos is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos 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 Sonos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonos Inc has no effect on the direction of American Axle i.e., American Axle and Sonos go up and down completely randomly.
Pair Corralation between American Axle and Sonos
Considering the 90-day investment horizon American Axle Manufacturing is expected to under-perform the Sonos. In addition to that, American Axle is 1.33 times more volatile than Sonos Inc. It trades about -0.14 of its total potential returns per unit of risk. Sonos Inc is currently generating about -0.03 per unit of volatility. If you would invest 1,408 in Sonos Inc on December 2, 2024 and sell it today you would lose (86.00) from holding Sonos Inc or give up 6.11% 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. Sonos Inc
Performance |
Timeline |
American Axle Manufa |
Sonos Inc |
American Axle and Sonos Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Axle and Sonos
The main advantage of trading using opposite American Axle and Sonos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Axle position performs unexpectedly, Sonos 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 Sonos will offset losses from the drop in Sonos' long position.American Axle vs. Lear Corporation | American Axle vs. Commercial Vehicle Group | American Axle vs. Adient PLC | American Axle vs. Gentex |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Stocks Directory Find actively traded stocks across global markets |