Correlation Between KB Home and Grupo Sports
Can any of the company-specific risk be diversified away by investing in both KB Home and Grupo Sports 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 Sports 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 Sports World, you can compare the effects of market volatilities on KB Home and Grupo Sports 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 Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Home and Grupo Sports.
Diversification Opportunities for KB Home and Grupo Sports
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KBH and Grupo is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding KB Home and Grupo Sports World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Sports World 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 Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Sports World has no effect on the direction of KB Home i.e., KB Home and Grupo Sports go up and down completely randomly.
Pair Corralation between KB Home and Grupo Sports
Assuming the 90 days trading horizon KB Home is expected to under-perform the Grupo Sports. But the stock apears to be less risky and, when comparing its historical volatility, KB Home is 1.39 times less risky than Grupo Sports. The stock trades about -0.21 of its potential returns per unit of risk. The Grupo Sports World is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 572.00 in Grupo Sports World on August 28, 2024 and sell it today you would earn a total of 68.00 from holding Grupo Sports World or generate 11.89% 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. Grupo Sports World
Performance |
| Timeline |
| KB Home |
| Grupo Sports World |
KB Home and Grupo Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Home and Grupo Sports
The main advantage of trading using opposite KB Home and Grupo Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Home position performs unexpectedly, Grupo Sports 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 Sports will offset losses from the drop in Grupo Sports' long position.| KB Home vs. Ameriprise Financial | KB Home vs. Genworth Financial | KB Home vs. CVS Health | KB Home vs. Samsung Electronics Co |
| Grupo Sports vs. Taiwan Semiconductor Manufacturing | Grupo Sports vs. Alibaba Group Holding | Grupo Sports vs. The Select Sector | Grupo Sports vs. Promotora y Operadora |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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