Correlation Between KB Home and Ameriprise Financial
Can any of the company-specific risk be diversified away by investing in both KB Home and Ameriprise Financial 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 KB Home and Ameriprise Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KB Home and Ameriprise Financial, you can compare the effects of market volatilities on KB Home and Ameriprise Financial 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 KB Home with a short position of Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Home and Ameriprise Financial.
Diversification Opportunities for KB Home and Ameriprise Financial
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KBH and Ameriprise is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding KB Home and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and KB Home 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 KB Home are associated (or correlated) with Ameriprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriprise Financial has no effect on the direction of KB Home i.e., KB Home and Ameriprise Financial go up and down completely randomly.
Pair Corralation between KB Home and Ameriprise Financial
Assuming the 90 days trading horizon KB Home is expected to generate 1.11 times less return on investment than Ameriprise Financial. In addition to that, KB Home is 1.08 times more volatile than Ameriprise Financial. It trades about 0.12 of its total potential returns per unit of risk. Ameriprise Financial is currently generating about 0.14 per unit of volatility. If you would invest 731,943 in Ameriprise Financial on August 29, 2024 and sell it today you would earn a total of 426,210 from holding Ameriprise Financial or generate 58.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Home vs. Ameriprise Financial
Performance |
| Timeline |
| KB Home |
| Ameriprise Financial |
KB Home and Ameriprise Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Home and Ameriprise Financial
The main advantage of trading using opposite KB Home and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Home position performs unexpectedly, Ameriprise Financial 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 Ameriprise Financial will offset losses from the drop in Ameriprise Financial's long position.| KB Home vs. CVS Health | KB Home vs. FibraHotel | KB Home vs. UnitedHealth Group Incorporated | KB Home vs. Capital One Financial |
| Ameriprise Financial vs. State Street | Ameriprise Financial vs. Regional SAB de | Ameriprise Financial vs. The Select Sector | Ameriprise Financial vs. SPDR Series Trust |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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