Correlation Between City Holding and Cavco Industries

Can any of the company-specific risk be diversified away by investing in both City Holding and Cavco Industries 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 City Holding and Cavco Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for City Holding and Cavco Industries

-0.04

Correlation Coefficient

City Holding  Cavco Industries

Good diversification

The 3 months correlation between City and Cavco is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding City Holding and Cavco Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cavco Industries and City Holding 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 City Holding are associated (or correlated) with Cavco Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cavco Industries has no effect on the direction of City Holding i.e., City Holding and Cavco Industries go up and down completely randomly.

Pair Corralation between City Holding and Cavco Industries

Given the investment horizon of 90 days City Holding is expected to generate 0.63 times more return on investment than Cavco Industries. However, City Holding is 1.6 times less risky than Cavco Industries. It trades about 0.05 of its potential returns per unit of risk. Cavco Industries is currently generating about -0.1 per unit of risk. If you would invest  11,600  in City Holding on May 7, 2025 and sell it today you would earn a total of  490.00  from holding City Holding or generate 4.22% return on investment over 90 days.

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

City Holding  vs.  Cavco Industries

City Holding

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in City Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, City Holding is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Cavco Industries

Risk-Adjusted Performance

Weakest

Over the last 90 days Cavco Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in September 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with City Holding and Cavco Industries

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

The idea behind City Holding and Cavco Industries 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.