Correlation Between Meritage and Cavco Industries
Can any of the company-specific risk be diversified away by investing in both Meritage 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 Meritage and Cavco Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meritage and Cavco Industries, you can compare the effects of market volatilities on Meritage 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 Meritage with a short position of Cavco Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meritage and Cavco Industries.
Diversification Opportunities for Meritage and Cavco Industries
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Meritage and Cavco is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Meritage and Cavco Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cavco Industries and Meritage 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 Meritage 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 Meritage i.e., Meritage and Cavco Industries go up and down completely randomly.
Pair Corralation between Meritage and Cavco Industries
Considering the 90-day investment horizon Meritage is expected to generate 3.81 times less return on investment than Cavco Industries. But when comparing it to its historical volatility, Meritage is 1.1 times less risky than Cavco Industries. It trades about 0.13 of its potential returns per unit of risk. Cavco Industries is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 41,868 in Cavco Industries on August 28, 2024 and sell it today you would earn a total of 11,449 from holding Cavco Industries or generate 27.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meritage vs. Cavco Industries
Performance |
| Timeline |
| Meritage |
| Cavco Industries |
Meritage and Cavco Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meritage and Cavco Industries
The main advantage of trading using opposite Meritage and Cavco Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meritage 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.| Meritage vs. TRI Pointe Homes | Meritage vs. MI Homes | Meritage vs. Beazer Homes USA | Meritage vs. Century Communities |
| Cavco Industries vs. Meritage | Cavco Industries vs. Installed Building Products | Cavco Industries vs. Taylor Morn Home | Cavco Industries vs. Legacy Housing Corp |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |