Correlation Between National Cinemedia and Harley Davidson

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

Diversification Opportunities for National Cinemedia and Harley Davidson

0.39
  Correlation Coefficient

Weak diversification

The 3 months correlation between National and Harley is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding National Cinemedia and Harley-Davidson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harley-Davidson and National Cinemedia 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 National Cinemedia 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 National Cinemedia i.e., National Cinemedia and Harley Davidson go up and down completely randomly.

Pair Corralation between National Cinemedia and Harley Davidson

Given the investment horizon of 90 days National Cinemedia is expected to under-perform the Harley Davidson. In addition to that, National Cinemedia is 2.07 times more volatile than Harley-Davidson. It trades about -0.57 of its total potential returns per unit of risk. Harley-Davidson is currently generating about -0.07 per unit of volatility. If you would invest  3,779  in Harley-Davidson on July 6, 2022 and sell it today you would lose (168.00)  from holding Harley-Davidson or give up 4.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

National Cinemedia  vs.  Harley-Davidson

 Performance (%) 
       Timeline  
National Cinemedia 
National Performance
0 of 100
Over the last 90 days National Cinemedia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

National Price Channel

Harley-Davidson 
Harley Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Harley-Davidson are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Harley Davidson exhibited solid returns over the last few months and may actually be approaching a breakup point.

Harley Price Channel

National Cinemedia and Harley Davidson Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with National Cinemedia and Harley Davidson

The main advantage of trading using opposite National Cinemedia and Harley Davidson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Cinemedia 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.
National Cinemedia vs. Amazon Inc
The idea behind National Cinemedia 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.
Harley Davidson vs. Amazon Inc
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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