Correlation Between American Axle and CSS Industries

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

Diversification Opportunities for American Axle and CSS Industries

0.0

Correlation Coefficient

American Axle  CSS Industries

Pay attention - limited upside

The 3 months correlation between American and CSS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and CSS Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSS Industries 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 CSS Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSS Industries has no effect on the direction of American Axle i.e., American Axle and CSS Industries go up and down completely randomly.

Pair Corralation between American Axle and CSS Industries

If you would invest  724.00  in American Axle Manufacturing on February 1, 2024 and sell it today you would earn a total of  10.00  from holding American Axle Manufacturing or generate 1.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

American Axle Manufacturing  vs.  CSS Industries

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 latest fragile performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

CSS Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSS Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CSS Industries is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with American Axle and CSS Industries

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

The idea behind American Axle Manufacturing and CSS Industries 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.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.