Correlation Between Harley Davidson and Patrick Industries
Can any of the company-specific risk be diversified away by investing in both Harley Davidson and Patrick 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 Harley Davidson and Patrick Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harley Davidson and Patrick Industries, you can compare the effects of market volatilities on Harley Davidson and Patrick 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 Harley Davidson with a short position of Patrick Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harley Davidson and Patrick Industries.
Diversification Opportunities for Harley Davidson and Patrick Industries
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Harley and Patrick is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Harley Davidson and Patrick Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patrick Industries and Harley Davidson 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 Harley Davidson are associated (or correlated) with Patrick Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patrick Industries has no effect on the direction of Harley Davidson i.e., Harley Davidson and Patrick Industries go up and down completely randomly.
Pair Corralation between Harley Davidson and Patrick Industries
Assuming the 90 days horizon Harley Davidson is expected to under-perform the Patrick Industries. In addition to that, Harley Davidson is 1.14 times more volatile than Patrick Industries. It trades about -0.02 of its total potential returns per unit of risk. Patrick Industries is currently generating about 0.05 per unit of volatility. If you would invest 6,666 in Patrick Industries on October 18, 2024 and sell it today you would earn a total of 1,634 from holding Patrick Industries or generate 24.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.56% |
| Values | Daily Returns |
Harley Davidson vs. Patrick Industries
Performance |
| Timeline |
| Harley Davidson |
| Patrick Industries |
Harley Davidson and Patrick Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harley Davidson and Patrick Industries
The main advantage of trading using opposite Harley Davidson and Patrick Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harley Davidson position performs unexpectedly, Patrick 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 Patrick Industries will offset losses from the drop in Patrick Industries' long position.| Harley Davidson vs. PLAYSTUDIOS A DL 0001 | Harley Davidson vs. PLAYMATES TOYS | Harley Davidson vs. Universal Display | Harley Davidson vs. TRAVEL LEISURE DL 01 |
| Patrick Industries vs. TYSON FOODS A | Patrick Industries vs. Tyson Foods | Patrick Industries vs. CALTAGIRONE EDITORE | Patrick Industries vs. Olympic Steel |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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