Correlation Between Where Food and American Axle
Can any of the company-specific risk be diversified away by investing in both Where Food 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 Where Food and American Axle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Where Food Comes and American Axle Manufacturing, you can compare the effects of market volatilities on Where Food 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 Where Food with a short position of American Axle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Where Food and American Axle.
Diversification Opportunities for Where Food and American Axle
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Where and American is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Where Food Comes 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 Where Food 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 Where Food Comes 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 Where Food i.e., Where Food and American Axle go up and down completely randomly.
Pair Corralation between Where Food and American Axle
Given the investment horizon of 90 days Where Food Comes is expected to generate 0.76 times more return on investment than American Axle. However, Where Food Comes is 1.32 times less risky than American Axle. It trades about 0.11 of its potential returns per unit of risk. American Axle Manufacturing is currently generating about -0.02 per unit of risk. If you would invest 1,089 in Where Food Comes on September 24, 2024 and sell it today you would earn a total of 156.00 from holding Where Food Comes or generate 14.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Where Food Comes vs. American Axle Manufacturing
Performance |
Timeline |
Where Food Comes |
American Axle Manufa |
Where Food and American Axle Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Where Food and American Axle
The main advantage of trading using opposite Where Food and American Axle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Where Food 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.Where Food vs. Dubber Limited | Where Food vs. Advanced Health Intelligence | Where Food vs. Danavation Technologies Corp | Where Food vs. BASE Inc |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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