Correlation Between Rocket Lab and Harley Davidson

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

Diversification Opportunities for Rocket Lab and Harley Davidson

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Rocket and Harley is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Lab USA and Harley-Davidson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harley-Davidson and Rocket Lab 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 Rocket Lab USA 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 Rocket Lab i.e., Rocket Lab and Harley Davidson go up and down completely randomly.

Pair Corralation between Rocket Lab and Harley Davidson

Given the investment horizon of 90 days Rocket Lab USA is expected to under-perform the Harley Davidson. In addition to that, Rocket Lab is 1.79 times more volatile than Harley-Davidson. It trades about -0.25 of its total potential returns per unit of risk. Harley-Davidson is currently generating about -0.16 per unit of volatility. If you would invest  3,823  in Harley-Davidson on July 3, 2022 and sell it today you would lose (335.00)  from holding Harley-Davidson or give up 8.76% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Rocket Lab USA  vs.  Harley-Davidson

 Performance (%) 
       Timeline  
Rocket Lab USA 
Rocket Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Rocket Lab USA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting essential indicators, Rocket Lab may actually be approaching a critical reversion point that can send shares even higher in November 2022.

Rocket Price Channel

Harley-Davidson 
Harley Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Harley-Davidson are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Harley Davidson may actually be approaching a critical reversion point that can send shares even higher in November 2022.

Harley Price Channel

Rocket Lab and Harley Davidson Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Rocket Lab and Harley Davidson

The main advantage of trading using opposite Rocket Lab and Harley Davidson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocket Lab 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.
Rocket Lab vs. Amazon Inc
The idea behind Rocket Lab USA 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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