Correlation Between NIPPON PROLOGIS and KB HOME
Can any of the company-specific risk be diversified away by investing in both NIPPON PROLOGIS and KB HOME 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 NIPPON PROLOGIS and KB HOME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NIPPON PROLOGIS REIT and KB HOME, you can compare the effects of market volatilities on NIPPON PROLOGIS and KB HOME 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 NIPPON PROLOGIS with a short position of KB HOME. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIPPON PROLOGIS and KB HOME.
Diversification Opportunities for NIPPON PROLOGIS and KB HOME
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NIPPON and KBH is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding NIPPON PROLOGIS REIT and KB HOME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB HOME and NIPPON PROLOGIS 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 NIPPON PROLOGIS REIT are associated (or correlated) with KB HOME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB HOME has no effect on the direction of NIPPON PROLOGIS i.e., NIPPON PROLOGIS and KB HOME go up and down completely randomly.
Pair Corralation between NIPPON PROLOGIS and KB HOME
Assuming the 90 days trading horizon NIPPON PROLOGIS is expected to generate 7.49 times less return on investment than KB HOME. But when comparing it to its historical volatility, NIPPON PROLOGIS REIT is 1.06 times less risky than KB HOME. It trades about 0.03 of its potential returns per unit of risk. KB HOME is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 7,325 in KB HOME on September 5, 2024 and sell it today you would earn a total of 525.00 from holding KB HOME or generate 7.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
NIPPON PROLOGIS REIT vs. KB HOME
Performance |
| Timeline |
| NIPPON PROLOGIS REIT |
| KB HOME |
NIPPON PROLOGIS and KB HOME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NIPPON PROLOGIS and KB HOME
The main advantage of trading using opposite NIPPON PROLOGIS and KB HOME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIPPON PROLOGIS position performs unexpectedly, KB HOME 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 KB HOME will offset losses from the drop in KB HOME's long position.| NIPPON PROLOGIS vs. KB HOME | NIPPON PROLOGIS vs. CENTURIA OFFICE REIT | NIPPON PROLOGIS vs. LANDSEA HOMES P | NIPPON PROLOGIS vs. SK TELECOM TDADR |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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