Correlation Between Fossil and KB Home
Can any of the company-specific risk be diversified away by investing in both Fossil 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 Fossil and KB Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fossil Group and KB Home, you can compare the effects of market volatilities on Fossil 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 Fossil with a short position of KB Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fossil and KB Home.
Diversification Opportunities for Fossil and KB Home
Very good diversification
The 3 months correlation between Fossil and KBH is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Fossil Group and KB Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Home and Fossil 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 Fossil Group 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 Fossil i.e., Fossil and KB Home go up and down completely randomly.
Pair Corralation between Fossil and KB Home
Given the investment horizon of 90 days Fossil Group is expected to generate 2.33 times more return on investment than KB Home. However, Fossil is 2.33 times more volatile than KB Home. It trades about 0.16 of its potential returns per unit of risk. KB Home is currently generating about 0.13 per unit of risk. If you would invest 127.00 in Fossil Group on August 31, 2024 and sell it today you would earn a total of 22.00 from holding Fossil Group or generate 17.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fossil Group vs. KB Home
Performance |
| Timeline |
| Fossil Group |
| KB Home |
Fossil and KB Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fossil and KB Home
The main advantage of trading using opposite Fossil and KB Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fossil 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.| Fossil vs. Lanvin Group Holdings | Fossil vs. Signet Jewelers | Fossil vs. Tapestry | Fossil vs. Capri Holdings |
| KB Home vs. Century Communities | KB Home vs. Dream Finders Homes | KB Home vs. DR Horton | KB Home vs. Everus Construction 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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