Correlation Between Charles Colvard and KB Home
Can any of the company-specific risk be diversified away by investing in both Charles Colvard 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 Charles Colvard and KB Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charles Colvard and KB Home, you can compare the effects of market volatilities on Charles Colvard 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 Charles Colvard with a short position of KB Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charles Colvard and KB Home.
Diversification Opportunities for Charles Colvard and KB Home
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Charles and KBH is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Charles Colvard and KB Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Home and Charles Colvard 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 Charles Colvard 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 Charles Colvard i.e., Charles Colvard and KB Home go up and down completely randomly.
Pair Corralation between Charles Colvard and KB Home
Given the investment horizon of 90 days Charles Colvard is expected to generate 2.06 times less return on investment than KB Home. In addition to that, Charles Colvard is 1.4 times more volatile than KB Home. It trades about 0.05 of its total potential returns per unit of risk. KB Home is currently generating about 0.14 per unit of volatility. If you would invest 7,975 in KB Home on August 27, 2024 and sell it today you would earn a total of 528.00 from holding KB Home or generate 6.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charles Colvard vs. KB Home
Performance |
| Timeline |
| Charles Colvard |
| KB Home |
Charles Colvard and KB Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charles Colvard and KB Home
The main advantage of trading using opposite Charles Colvard and KB Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charles Colvard 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.| Charles Colvard vs. Lanvin Group Holdings | Charles Colvard vs. MYT Netherlands Parent | Charles Colvard vs. Movado Group | Charles Colvard vs. Birks Group |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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