Correlation Between KB Home and Grupo Lamosa
Can any of the company-specific risk be diversified away by investing in both KB Home and Grupo Lamosa 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 Grupo Lamosa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KB Home and Grupo Lamosa SAB, you can compare the effects of market volatilities on KB Home and Grupo Lamosa 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 Grupo Lamosa. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Home and Grupo Lamosa.
Diversification Opportunities for KB Home and Grupo Lamosa
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KBH and Grupo is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding KB Home and Grupo Lamosa SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Lamosa 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 Grupo Lamosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Lamosa SAB has no effect on the direction of KB Home i.e., KB Home and Grupo Lamosa go up and down completely randomly.
Pair Corralation between KB Home and Grupo Lamosa
Assuming the 90 days trading horizon KB Home is expected to under-perform the Grupo Lamosa. In addition to that, KB Home is 2.99 times more volatile than Grupo Lamosa SAB. It trades about -0.13 of its total potential returns per unit of risk. Grupo Lamosa SAB is currently generating about -0.07 per unit of volatility. If you would invest 11,899 in Grupo Lamosa SAB on October 24, 2024 and sell it today you would lose (399.00) from holding Grupo Lamosa SAB or give up 3.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Home vs. Grupo Lamosa SAB
Performance |
| Timeline |
| KB Home |
| Grupo Lamosa SAB |
KB Home and Grupo Lamosa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Home and Grupo Lamosa
The main advantage of trading using opposite KB Home and Grupo Lamosa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Home position performs unexpectedly, Grupo Lamosa 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 Grupo Lamosa will offset losses from the drop in Grupo Lamosa's long position.| KB Home vs. Prudential Financial | KB Home vs. Hoteles City Express | KB Home vs. Capital One Financial | KB Home vs. Verizon Communications |
| Grupo Lamosa vs. Hoteles City Express | Grupo Lamosa vs. Samsung Electronics Co | Grupo Lamosa vs. KB Home | Grupo Lamosa vs. Grupo Sports World |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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