Correlation Between Harley Davidson and Workhorse

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

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

Diversification Opportunities for Harley Davidson and Workhorse

-0.42

Correlation Coefficient

Harley Davidson  Workhorse

Very good diversification

The 3 months correlation between Harley and Workhorse is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Harley Davidson and Workhorse Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workhorse Group 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 Workhorse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workhorse Group has no effect on the direction of Harley Davidson i.e., Harley Davidson and Workhorse go up and down completely randomly.

Pair Corralation between Harley Davidson and Workhorse

Considering the 90-day investment horizon Harley Davidson is expected to under-perform the Workhorse. But the stock apears to be less risky and, when comparing its historical volatility, Harley Davidson is 4.65 times less risky than Workhorse. The stock trades about -0.08 of its potential returns per unit of risk. The Workhorse Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  68.00  in Workhorse Group on September 13, 2024 and sell it today you would earn a total of  39.00  from holding Workhorse Group or generate 57.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Harley Davidson  vs.  Workhorse Group

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 latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Workhorse Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Workhorse Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical indicators, Workhorse unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harley Davidson and Workhorse

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

The idea behind Harley Davidson and Workhorse Group 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.