Correlation Between American Axle and Innoviz Technologies
Can any of the company-specific risk be diversified away by investing in both American Axle and Innoviz Technologies 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 Innoviz Technologies 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 Innoviz Technologies, you can compare the effects of market volatilities on American Axle and Innoviz Technologies 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 Innoviz Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Axle and Innoviz Technologies.
Diversification Opportunities for American Axle and Innoviz Technologies
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Innoviz is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and Innoviz Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innoviz Technologies 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 Innoviz Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innoviz Technologies has no effect on the direction of American Axle i.e., American Axle and Innoviz Technologies go up and down completely randomly.
Pair Corralation between American Axle and Innoviz Technologies
Considering the 90-day investment horizon American Axle Manufacturing is expected to generate 0.49 times more return on investment than Innoviz Technologies. However, American Axle Manufacturing is 2.05 times less risky than Innoviz Technologies. It trades about -0.04 of its potential returns per unit of risk. Innoviz Technologies is currently generating about -0.15 per unit of risk. If you would invest 767.00 in American Axle Manufacturing on March 12, 2024 and sell it today you would lose (14.00) from holding American Axle Manufacturing or give up 1.83% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
American Axle Manufacturing vs. Innoviz Technologies
Performance |
Timeline |
American Axle Manufa |
Innoviz Technologies |
American Axle and Innoviz Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Axle and Innoviz Technologies
The main advantage of trading using opposite American Axle and Innoviz Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Axle position performs unexpectedly, Innoviz Technologies 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 Innoviz Technologies will offset losses from the drop in Innoviz Technologies' long position.American Axle vs. Allison Transmission Holdings | American Axle vs. LKQ Corporation | American Axle vs. Lear Corporation | American Axle vs. Gentex |
Innoviz Technologies vs. Allison Transmission Holdings | Innoviz Technologies vs. LKQ Corporation | Innoviz Technologies vs. Lear Corporation | Innoviz Technologies 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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