Correlation Between HomeToGo and KB HOME
Can any of the company-specific risk be diversified away by investing in both HomeToGo 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 HomeToGo and KB HOME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HomeToGo SE and KB HOME, you can compare the effects of market volatilities on HomeToGo 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 HomeToGo with a short position of KB HOME. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeToGo and KB HOME.
Diversification Opportunities for HomeToGo and KB HOME
Good diversification
The 3 months correlation between HomeToGo and KBH is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding HomeToGo SE and KB HOME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB HOME and HomeToGo 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 HomeToGo SE 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 HomeToGo i.e., HomeToGo and KB HOME go up and down completely randomly.
Pair Corralation between HomeToGo and KB HOME
Assuming the 90 days trading horizon HomeToGo SE is expected to generate 1.82 times more return on investment than KB HOME. However, HomeToGo is 1.82 times more volatile than KB HOME. It trades about -0.06 of its potential returns per unit of risk. KB HOME is currently generating about -0.32 per unit of risk. If you would invest 203.00 in HomeToGo SE on September 21, 2024 and sell it today you would lose (13.00) from holding HomeToGo SE or give up 6.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HomeToGo SE vs. KB HOME
Performance |
| Timeline |
| HomeToGo SE |
| KB HOME |
HomeToGo and KB HOME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HomeToGo and KB HOME
The main advantage of trading using opposite HomeToGo and KB HOME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeToGo 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.| HomeToGo vs. Tencent Holdings | HomeToGo vs. Superior Plus Corp | HomeToGo vs. SIVERS SEMICONDUCTORS AB | HomeToGo vs. NorAm Drilling AS |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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