Correlation Between KB Home and INVEX Controladora
Can any of the company-specific risk be diversified away by investing in both KB Home and INVEX Controladora 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 INVEX Controladora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KB Home and INVEX Controladora SAB, you can compare the effects of market volatilities on KB Home and INVEX Controladora 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 INVEX Controladora. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Home and INVEX Controladora.
Diversification Opportunities for KB Home and INVEX Controladora
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between KBH and INVEX is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding KB Home and INVEX Controladora SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVEX Controladora SAB 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 INVEX Controladora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVEX Controladora SAB has no effect on the direction of KB Home i.e., KB Home and INVEX Controladora go up and down completely randomly.
Pair Corralation between KB Home and INVEX Controladora
Assuming the 90 days trading horizon KB Home is expected to under-perform the INVEX Controladora. In addition to that, KB Home is 1.5 times more volatile than INVEX Controladora SAB. It trades about -0.21 of its total potential returns per unit of risk. INVEX Controladora SAB is currently generating about 0.06 per unit of volatility. If you would invest 8,200 in INVEX Controladora SAB on September 4, 2024 and sell it today you would earn a total of 100.00 from holding INVEX Controladora SAB or generate 1.22% 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. INVEX Controladora SAB
Performance |
| Timeline |
| KB Home |
| INVEX Controladora SAB |
KB Home and INVEX Controladora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Home and INVEX Controladora
The main advantage of trading using opposite KB Home and INVEX Controladora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Home position performs unexpectedly, INVEX Controladora 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 INVEX Controladora will offset losses from the drop in INVEX Controladora's long position.| KB Home vs. Micron Technology | KB Home vs. UnitedHealth Group Incorporated | KB Home vs. Grupo Sports World | KB Home vs. GMxico Transportes SAB |
| INVEX Controladora vs. Grupo Sports World | INVEX Controladora vs. The Bank of | INVEX Controladora vs. Prudential Financial | INVEX Controladora vs. Verizon Communications |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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