Correlation Between Harley Davidson and Camping World

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

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

Diversification Opportunities for Harley Davidson and Camping World

0.22

Correlation Coefficient

Harley Davidson  Camping World

Modest diversification

The 3 months correlation between Harley and Camping is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Harley Davidson and Camping World Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camping World Holdings 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 Camping World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camping World Holdings has no effect on the direction of Harley Davidson i.e., Harley Davidson and Camping World go up and down completely randomly.

Pair Corralation between Harley Davidson and Camping World

Considering the 90-day investment horizon Harley Davidson is expected to generate 0.55 times more return on investment than Camping World. However, Harley Davidson is 1.82 times less risky than Camping World. It trades about -0.23 of its potential returns per unit of risk. Camping World Holdings is currently generating about -0.21 per unit of risk. If you would invest  4,275  in Harley Davidson on January 26, 2024 and sell it today you would lose (331.00) from holding Harley Davidson or give up 7.74% of portfolio value over 90 days.

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

Harley Davidson  vs.  Camping World Holdings

Harley Davidson

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Harley Davidson has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Harley Davidson reported solid returns over the last few months and may actually be approaching a breakup point.

Camping World Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Camping World Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Harley Davidson and Camping World

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

The idea behind Harley Davidson and Camping World Holdings 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.