Correlation Between Cooper Stnd and Harley Davidson

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Can any of the company-specific risk be diversified away by investing in both Cooper Stnd 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 Cooper Stnd and Harley Davidson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cooper Stnd and Harley Davidson, you can compare the effects of market volatilities on Cooper Stnd 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 Cooper Stnd with a short position of Harley Davidson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cooper Stnd and Harley Davidson.

Diversification Opportunities for Cooper Stnd and Harley Davidson

-0.18
  Correlation Coefficient

Good diversification

The 3 months correlation between Cooper and Harley is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Cooper Stnd and Harley Davidson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harley Davidson and Cooper Stnd 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 Cooper Stnd 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 Cooper Stnd i.e., Cooper Stnd and Harley Davidson go up and down completely randomly.

Pair Corralation between Cooper Stnd and Harley Davidson

Considering the 90-day investment horizon Cooper Stnd is expected to generate 2.1 times more return on investment than Harley Davidson. However, Cooper Stnd is 2.1 times more volatile than Harley Davidson. It trades about -0.11 of its potential returns per unit of risk. Harley Davidson is currently generating about -0.42 per unit of risk. If you would invest  1,461  in Cooper Stnd on October 5, 2024 and sell it today you would lose (105.00) from holding Cooper Stnd or give up 7.19% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Cooper Stnd  vs.  Harley Davidson

 Performance 
       Timeline  
Cooper Stnd 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Cooper Stnd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Cooper Stnd may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Harley Davidson 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Harley Davidson has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Cooper Stnd and Harley Davidson Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cooper Stnd and Harley Davidson

The main advantage of trading using opposite Cooper Stnd and Harley Davidson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cooper Stnd 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 Cooper Stnd 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.
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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