Correlation Between Burlington Stores and KB Home
Can any of the company-specific risk be diversified away by investing in both Burlington Stores 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 Burlington Stores and KB Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and KB Home, you can compare the effects of market volatilities on Burlington Stores 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 Burlington Stores with a short position of KB Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and KB Home.
Diversification Opportunities for Burlington Stores and KB Home
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Burlington and KBH is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and KB Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Home and Burlington Stores 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 Burlington Stores 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 Burlington Stores i.e., Burlington Stores and KB Home go up and down completely randomly.
Pair Corralation between Burlington Stores and KB Home
Assuming the 90 days trading horizon Burlington Stores is expected to generate 5.95 times more return on investment than KB Home. However, Burlington Stores is 5.95 times more volatile than KB Home. It trades about 0.22 of its potential returns per unit of risk. KB Home is currently generating about -0.21 per unit of risk. If you would invest 425,300 in Burlington Stores on August 28, 2024 and sell it today you would earn a total of 184,700 from holding Burlington Stores or generate 43.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Burlington Stores vs. KB Home
Performance |
| Timeline |
| Burlington Stores |
| KB Home |
Burlington Stores and KB Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and KB Home
The main advantage of trading using opposite Burlington Stores and KB Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores 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.| Burlington Stores vs. Cognizant Technology Solutions | Burlington Stores vs. United States Steel | Burlington Stores vs. Verizon Communications | Burlington Stores vs. Genworth Financial |
| KB Home vs. Ameriprise Financial | KB Home vs. Genworth Financial | KB Home vs. CVS Health | KB Home vs. Samsung Electronics Co |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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