Correlation Between Ameriprise Financial and KB Home
Can any of the company-specific risk be diversified away by investing in both Ameriprise Financial 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 Ameriprise Financial and KB Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameriprise Financial and KB Home, you can compare the effects of market volatilities on Ameriprise Financial 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 Ameriprise Financial with a short position of KB Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameriprise Financial and KB Home.
Diversification Opportunities for Ameriprise Financial and KB Home
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ameriprise and KBH is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ameriprise Financial and KB Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Home and Ameriprise Financial 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 Ameriprise Financial 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 Ameriprise Financial i.e., Ameriprise Financial and KB Home go up and down completely randomly.
Pair Corralation between Ameriprise Financial and KB Home
Assuming the 90 days trading horizon Ameriprise Financial is expected to generate 0.93 times more return on investment than KB Home. However, Ameriprise Financial is 1.08 times less risky than KB Home. It trades about 0.14 of its potential returns per unit of risk. KB Home is currently generating about 0.12 per unit of risk. If you would invest 731,943 in Ameriprise Financial on August 29, 2024 and sell it today you would earn a total of 426,210 from holding Ameriprise Financial or generate 58.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ameriprise Financial vs. KB Home
Performance |
| Timeline |
| Ameriprise Financial |
| KB Home |
Ameriprise Financial and KB Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ameriprise Financial and KB Home
The main advantage of trading using opposite Ameriprise Financial and KB Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameriprise Financial 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.| Ameriprise Financial vs. State Street | Ameriprise Financial vs. Regional SAB de | Ameriprise Financial vs. The Select Sector | Ameriprise Financial vs. SPDR Series Trust |
| KB Home vs. CVS Health | KB Home vs. FibraHotel | KB Home vs. UnitedHealth Group Incorporated | KB Home vs. Capital One Financial |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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