Correlation Between City Holding and Dime Community

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

By analyzing existing cross correlation between City Holding and Dime Community Bancshares, you can compare the effects of market volatilities on City Holding and Dime Community 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 Dime Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Holding and Dime Community.

Diversification Opportunities for City Holding and Dime Community

0.73

Correlation Coefficient

City Holding  Dime Community

Poor diversification

The 3 months correlation between City and Dime is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding City Holding and Dime Community Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dime Community Bancshares 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 Dime Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dime Community Bancshares has no effect on the direction of City Holding i.e., City Holding and Dime Community go up and down completely randomly.

Pair Corralation between City Holding and Dime Community

Given the investment horizon of 90 days City Holding is expected to generate 1.98 times less return on investment than Dime Community. In addition to that, City Holding is 1.24 times more volatile than Dime Community Bancshares. It trades about 0.06 of its total potential returns per unit of risk. Dime Community Bancshares is currently generating about 0.14 per unit of volatility. If you would invest  1,866  in Dime Community Bancshares on May 6, 2025 and sell it today you would earn a total of  186.00  from holding Dime Community Bancshares or generate 9.97% return on investment over 90 days.

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

City Holding  vs.  Dime Community Bancshares

City Holding

Risk-Adjusted Performance

Insignificant

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.

Dime Community Bancshares

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dime Community Bancshares are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Dime Community may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with City Holding and Dime Community

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

The idea behind City Holding and Dime Community Bancshares 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.

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 the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.