Correlation Between KB Home and FibraHotel
Can any of the company-specific risk be diversified away by investing in both KB Home and FibraHotel 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 FibraHotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KB Home and FibraHotel, you can compare the effects of market volatilities on KB Home and FibraHotel 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 FibraHotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Home and FibraHotel.
Diversification Opportunities for KB Home and FibraHotel
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KBH and FibraHotel is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding KB Home and FibraHotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibraHotel 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 FibraHotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FibraHotel has no effect on the direction of KB Home i.e., KB Home and FibraHotel go up and down completely randomly.
Pair Corralation between KB Home and FibraHotel
Assuming the 90 days trading horizon KB Home is expected to under-perform the FibraHotel. But the stock apears to be less risky and, when comparing its historical volatility, KB Home is 1.85 times less risky than FibraHotel. The stock trades about -0.21 of its potential returns per unit of risk. The FibraHotel is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 789.00 in FibraHotel on August 27, 2024 and sell it today you would earn a total of 92.00 from holding FibraHotel or generate 11.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Home vs. FibraHotel
Performance |
| Timeline |
| KB Home |
| FibraHotel |
KB Home and FibraHotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Home and FibraHotel
The main advantage of trading using opposite KB Home and FibraHotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Home position performs unexpectedly, FibraHotel 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 FibraHotel will offset losses from the drop in FibraHotel's long position.| KB Home vs. Ameriprise Financial | KB Home vs. Genworth Financial | KB Home vs. CVS Health | KB Home vs. Samsung Electronics Co |
| FibraHotel vs. Promotora y Operadora | FibraHotel vs. Megacable Holdings S | FibraHotel vs. ALPEK SAB de | FibraHotel vs. Gentera SAB de |
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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