Correlation Between Worksport and Harley Davidson

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

By analyzing existing cross correlation between Worksport and Harley Davidson, you can compare the effects of market volatilities on Worksport and Harley Davidson 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 Worksport with a short position of Harley Davidson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worksport and Harley Davidson.

Diversification Opportunities for Worksport and Harley Davidson

-0.43

Correlation Coefficient

Worksport  Harley Davidson

Very good diversification

The 3 months correlation between Worksport and Harley is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Worksport and Harley Davidson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harley Davidson and Worksport 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 Worksport are associated (or correlated) with Harley Davidson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harley Davidson has no effect on the direction of Worksport i.e., Worksport and Harley Davidson go up and down completely randomly.

Pair Corralation between Worksport and Harley Davidson

Given the investment horizon of 90 days Worksport is expected to generate 3.37 times more return on investment than Harley Davidson. However, Worksport is 3.37 times more volatile than Harley Davidson. It trades about 0.21 of its potential returns per unit of risk. Harley Davidson is currently generating about -0.1 per unit of risk. If you would invest  45.00  in Worksport on February 14, 2024 and sell it today you would earn a total of  25.00  from holding Worksport or generate 55.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Worksport  vs.  Harley Davidson

Worksport

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Worksport has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Harley Davidson

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harley Davidson has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Harley Davidson is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Worksport and Harley Davidson

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

The idea behind Worksport and Harley Davidson 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 CEOs Directory module to screen CEOs from public companies around the world.