Correlation Between Visteon Corp and Harley Davidson

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

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

Diversification Opportunities for Visteon Corp and Harley Davidson

0.78

Correlation Coefficient

Visteon Corp  Harley Davidson

Poor diversification

The 3 months correlation between Visteon and Harley is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Visteon Corp and Harley Davidson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harley Davidson and Visteon Corp 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 Visteon Corp 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 Visteon Corp i.e., Visteon Corp and Harley Davidson go up and down completely randomly.

Pair Corralation between Visteon Corp and Harley Davidson

Allowing for the 90-day total investment horizon Visteon Corp is expected to generate 0.76 times more return on investment than Harley Davidson. However, Visteon Corp is 1.32 times less risky than Harley Davidson. It trades about 0.02 of its potential returns per unit of risk. Harley Davidson is currently generating about 0.01 per unit of risk. If you would invest  8,413  in Visteon Corp on March 2, 2025 and sell it today you would earn a total of  30.00  from holding Visteon Corp or generate 0.36% return on investment over 90 days.

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

Visteon Corp  vs.  Harley Davidson

Visteon Corp

Risk-Adjusted Performance

Weak

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

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 nearly stable basic indicators, Harley Davidson is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Visteon Corp and Harley Davidson

The main advantage of trading using opposite Visteon Corp and Harley Davidson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visteon Corp 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 Visteon Corp 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.