Correlation Between EZGO Technologies and Cavco Industries

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

Diversification Opportunities for EZGO Technologies and Cavco Industries

-0.48
  Correlation Coefficient

Very good diversification

The 3 months correlation between EZGO and Cavco is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding EZGO Technologies and Cavco Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cavco Industries and EZGO Technologies 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 EZGO Technologies 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 EZGO Technologies i.e., EZGO Technologies and Cavco Industries go up and down completely randomly.

Pair Corralation between EZGO Technologies and Cavco Industries

Given the investment horizon of 90 days EZGO Technologies is expected to under-perform the Cavco Industries. In addition to that, EZGO Technologies is 3.83 times more volatile than Cavco Industries. It trades about -0.15 of its total potential returns per unit of risk. Cavco Industries is currently generating about -0.38 per unit of volatility. If you would invest  50,369  in Cavco Industries on October 10, 2024 and sell it today you would lose (6,285) from holding Cavco Industries or give up 12.48% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

EZGO Technologies  vs.  Cavco Industries

 Performance 
       Timeline  
EZGO Technologies 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Cavco Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Cavco Industries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

EZGO Technologies and Cavco Industries Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with EZGO Technologies and Cavco Industries

The main advantage of trading using opposite EZGO Technologies and Cavco Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EZGO Technologies 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 EZGO Technologies 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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