Correlation Between City Of and KB HOME
Can any of the company-specific risk be diversified away by investing in both City Of 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 City Of and KB HOME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The City of and KB HOME, you can compare the effects of market volatilities on City Of 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 City Of with a short position of KB HOME. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Of and KB HOME.
Diversification Opportunities for City Of and KB HOME
Modest diversification
The 3 months correlation between City and KBH is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding The City of and KB HOME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB HOME and City Of 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 The City of 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 City Of i.e., City Of and KB HOME go up and down completely randomly.
Pair Corralation between City Of and KB HOME
Assuming the 90 days horizon City Of is expected to generate 5.52 times less return on investment than KB HOME. But when comparing it to its historical volatility, The City of is 1.11 times less risky than KB HOME. It trades about 0.04 of its potential returns per unit of risk. KB HOME is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 7,375 in KB HOME on August 29, 2024 and sell it today you would earn a total of 475.00 from holding KB HOME or generate 6.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The City of vs. KB HOME
Performance |
| Timeline |
| The City |
| KB HOME |
City Of and KB HOME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Of and KB HOME
The main advantage of trading using opposite City Of and KB HOME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Of 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.| City Of vs. KB HOME | City Of vs. Penta Ocean Construction Co | City Of vs. Nufarm Limited | City Of vs. ANGI Homeservices |
| KB HOME vs. Apple Inc | KB HOME vs. Apple Inc | KB HOME vs. Superior Plus Corp | KB HOME vs. SIVERS SEMICONDUCTORS AB |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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