Correlation Between Harley Davidson and Ree Automotive

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

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

Diversification Opportunities for Harley Davidson and Ree Automotive

0.14

Correlation Coefficient

Harley Davidson  Ree Automotive

Average diversification

The 3 months correlation between Harley and Ree is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Harley Davidson and Ree Automotive Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ree Automotive Holding 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 Ree Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ree Automotive Holding has no effect on the direction of Harley Davidson i.e., Harley Davidson and Ree Automotive go up and down completely randomly.

Pair Corralation between Harley Davidson and Ree Automotive

Considering the 90-day investment horizon Harley Davidson is expected to under-perform the Ree Automotive. But the stock apears to be less risky and, when comparing its historical volatility, Harley Davidson is 3.47 times less risky than Ree Automotive. The stock trades about -0.25 of its potential returns per unit of risk. The Ree Automotive Holding is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  773.00  in Ree Automotive Holding on November 29, 2024 and sell it today you would lose (31.00) from holding Ree Automotive Holding or give up 4.01% of portfolio value over 90 days.

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

Harley Davidson  vs.  Ree Automotive Holding

Harley Davidson

Risk-Adjusted Performance

Very Weak

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

Ree Automotive Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ree Automotive Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Ree Automotive is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Harley Davidson and Ree Automotive

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

The idea behind Harley Davidson and Ree Automotive Holding 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.