Correlation Between H2O Retailing and KB HOME
Can any of the company-specific risk be diversified away by investing in both H2O Retailing 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 H2O Retailing and KB HOME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H2O Retailing and KB HOME, you can compare the effects of market volatilities on H2O Retailing 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 H2O Retailing with a short position of KB HOME. Check out your portfolio center. Please also check ongoing floating volatility patterns of H2O Retailing and KB HOME.
Diversification Opportunities for H2O Retailing and KB HOME
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between H2O and KBH is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding H2O Retailing and KB HOME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB HOME and H2O Retailing 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 H2O Retailing 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 H2O Retailing i.e., H2O Retailing and KB HOME go up and down completely randomly.
Pair Corralation between H2O Retailing and KB HOME
Assuming the 90 days horizon H2O Retailing is expected to generate 1.26 times more return on investment than KB HOME. However, H2O Retailing is 1.26 times more volatile than KB HOME. It trades about 0.05 of its potential returns per unit of risk. KB HOME is currently generating about -0.31 per unit of risk. If you would invest 1,340 in H2O Retailing on October 16, 2024 and sell it today you would earn a total of 20.00 from holding H2O Retailing or generate 1.49% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
H2O Retailing vs. KB HOME
Performance |
Timeline |
H2O Retailing |
KB HOME |
H2O Retailing and KB HOME Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with H2O Retailing and KB HOME
The main advantage of trading using opposite H2O Retailing and KB HOME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H2O Retailing 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.H2O Retailing vs. GOLD ROAD RES | H2O Retailing vs. Air Transport Services | H2O Retailing vs. Martin Marietta Materials | H2O Retailing vs. SAFEROADS HLDGS |
KB HOME vs. SANOK RUBBER ZY | KB HOME vs. H2O Retailing | KB HOME vs. Retail Estates NV | KB HOME vs. FAST RETAIL ADR |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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