Correlation Between Marine Products and Harley Davidson

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

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

Diversification Opportunities for Marine Products and Harley Davidson

0.52

Correlation Coefficient

Marine Products  Harley Davidson

Very weak diversification

The 3 months correlation between Marine and Harley is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Marine Products and Harley Davidson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harley Davidson and Marine Products 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 Marine Products 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 Marine Products i.e., Marine Products and Harley Davidson go up and down completely randomly.

Pair Corralation between Marine Products and Harley Davidson

Considering the 90-day investment horizon Marine Products is expected to generate 1.38 times more return on investment than Harley Davidson. However, Marine Products is 1.38 times more volatile than Harley Davidson. It trades about 0.05 of its potential returns per unit of risk. Harley Davidson is currently generating about -0.33 per unit of risk. If you would invest  1,066  in Marine Products on January 20, 2024 and sell it today you would earn a total of  22.00  from holding Marine Products or generate 2.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Marine Products  vs.  Harley Davidson

Marine Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marine Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Marine Products is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Harley Davidson

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harley Davidson are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Harley Davidson reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marine Products and Harley Davidson

The main advantage of trading using opposite Marine Products and Harley Davidson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marine Products 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 Marine Products 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.