Correlation Between American Axle and Voyager Acquisition

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

Diversification Opportunities for American Axle and Voyager Acquisition

0.04

Correlation Coefficient

American Axle  Voyager Acquisition

Significant diversification

The 3 months correlation between American and Voyager is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and Voyager Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voyager Acquisition Corp 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 Voyager Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voyager Acquisition Corp has no effect on the direction of American Axle i.e., American Axle and Voyager Acquisition go up and down completely randomly.

Pair Corralation between American Axle and Voyager Acquisition

Considering the 90-day investment horizon American Axle Manufacturing is expected to under-perform the Voyager Acquisition. In addition to that, American Axle is 17.7 times more volatile than Voyager Acquisition Corp. It trades about -0.02 of its total potential returns per unit of risk. Voyager Acquisition Corp is currently generating about 0.08 per unit of volatility. If you would invest  998.00  in Voyager Acquisition Corp on October 7, 2024 and sell it today you would earn a total of  7.00  from holding Voyager Acquisition Corp or generate 0.7% return on investment over 90 days.

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

American Axle Manufacturing  vs.  Voyager Acquisition Corp

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.

Voyager Acquisition Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Voyager Acquisition Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Voyager Acquisition is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with American Axle and Voyager Acquisition

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

The idea behind American Axle Manufacturing and Voyager Acquisition Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.