Correlation Between Binah Capital and American Axle

Can any of the company-specific risk be diversified away by investing in both Binah Capital and American Axle 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 Binah Capital and American Axle into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Binah Capital Group, and American Axle Manufacturing, you can compare the effects of market volatilities on Binah Capital and American Axle 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 Binah Capital with a short position of American Axle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binah Capital and American Axle.

Diversification Opportunities for Binah Capital and American Axle

0.21

Correlation Coefficient

Binah Capital  American Axle

Modest diversification

The 3 months correlation between Binah and American is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Binah Capital Group, and American Axle Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Axle Manufa and Binah Capital 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 Binah Capital Group, are associated (or correlated) with American Axle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Axle Manufa has no effect on the direction of Binah Capital i.e., Binah Capital and American Axle go up and down completely randomly.

Pair Corralation between Binah Capital and American Axle

Assuming the 90 days horizon Binah Capital Group, is expected to generate 8.92 times more return on investment than American Axle. However, Binah Capital is 8.92 times more volatile than American Axle Manufacturing. It trades about 0.1 of its potential returns per unit of risk. American Axle Manufacturing is currently generating about 0.14 per unit of risk. If you would invest  5.90  in Binah Capital Group, on September 12, 2024 and sell it today you would earn a total of  0.19  from holding Binah Capital Group, or generate 3.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	65.08%
Values	Daily Returns

Binah Capital Group,  vs.  American Axle Manufacturing

Binah Capital Group,

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Binah Capital Group, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly unfluctuating basic indicators, Binah Capital showed solid returns over the last few months and may actually be approaching a breakup point.

American Axle Manufa

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Axle Manufacturing are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, American Axle disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Binah Capital and American Axle

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

The idea behind Binah Capital Group, and American Axle Manufacturing 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.