Correlation Between KB Home and Alphabet
Can any of the company-specific risk be diversified away by investing in both KB Home and Alphabet 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 Alphabet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KB Home and Alphabet Inc, you can compare the effects of market volatilities on KB Home and Alphabet 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 Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Home and Alphabet.
Diversification Opportunities for KB Home and Alphabet
Very weak diversification
The 3 months correlation between KBH and Alphabet is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding KB Home and Alphabet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet 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 Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet has no effect on the direction of KB Home i.e., KB Home and Alphabet go up and down completely randomly.
Pair Corralation between KB Home and Alphabet
Assuming the 90 days trading horizon KB Home is expected to generate 1.29 times more return on investment than Alphabet. However, KB Home is 1.29 times more volatile than Alphabet Inc. It trades about 0.1 of its potential returns per unit of risk. Alphabet Inc is currently generating about 0.09 per unit of risk. If you would invest 92,624 in KB Home on September 2, 2024 and sell it today you would earn a total of 64,076 from holding KB Home or generate 69.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
KB Home vs. Alphabet Inc
Performance |
| Timeline |
| KB Home |
| Alphabet |
KB Home and Alphabet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Home and Alphabet
The main advantage of trading using opposite KB Home and Alphabet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Home position performs unexpectedly, Alphabet 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 Alphabet will offset losses from the drop in Alphabet's long position.| KB Home vs. Lennar | KB Home vs. Desarrolladora Homex SAB | KB Home vs. Urbi Desarrollos Urbanos | KB Home vs. Sare Holding SAB |
| Alphabet vs. Taiwan Semiconductor Manufacturing | Alphabet vs. McEwen Mining | Alphabet vs. KB Home | Alphabet vs. Micron Technology |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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