Correlation Between Modine Manufacturing and Harley Davidson
Can any of the company-specific risk be diversified away by investing in both Modine Manufacturing 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 Modine Manufacturing and Harley Davidson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Modine Manufacturing and Harley Davidson, you can compare the effects of market volatilities on Modine Manufacturing 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 Modine Manufacturing with a short position of Harley Davidson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modine Manufacturing and Harley Davidson.
Diversification Opportunities for Modine Manufacturing and Harley Davidson
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Modine and Harley is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing and Harley Davidson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harley Davidson and Modine Manufacturing 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 Modine Manufacturing 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 Modine Manufacturing i.e., Modine Manufacturing and Harley Davidson go up and down completely randomly.
Pair Corralation between Modine Manufacturing and Harley Davidson
Considering the 90-day investment horizon Modine Manufacturing is expected to generate 2.89 times more return on investment than Harley Davidson. However, Modine Manufacturing is 2.89 times more volatile than Harley Davidson. It trades about -0.07 of its potential returns per unit of risk. Harley Davidson is currently generating about -0.22 per unit of risk. If you would invest 12,501 in Modine Manufacturing on November 6, 2024 and sell it today you would lose (2,854) from holding Modine Manufacturing or give up 22.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Modine Manufacturing vs. Harley Davidson
Performance |
| Timeline |
| Modine Manufacturing |
| Harley Davidson |
Modine Manufacturing and Harley Davidson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Modine Manufacturing and Harley Davidson
The main advantage of trading using opposite Modine Manufacturing and Harley Davidson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modine Manufacturing 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.| Modine Manufacturing vs. Cooper Stnd | Modine Manufacturing vs. Motorcar Parts of | Modine Manufacturing vs. American Axle Manufacturing | Modine Manufacturing vs. Stoneridge |
| Harley Davidson vs. Vestis | Harley Davidson vs. Multi Ways Holdings | Harley Davidson vs. Lend Lease Group | Harley Davidson vs. Hertz Global Hldgs |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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