Correlation Between KB HOME and Haverty Furniture
Can any of the company-specific risk be diversified away by investing in both KB HOME and Haverty Furniture 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 Haverty Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KB HOME and Haverty Furniture Companies, you can compare the effects of market volatilities on KB HOME and Haverty Furniture 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 Haverty Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB HOME and Haverty Furniture.
Diversification Opportunities for KB HOME and Haverty Furniture
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KBH and Haverty is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding KB HOME and Haverty Furniture Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haverty Furniture 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 Haverty Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haverty Furniture has no effect on the direction of KB HOME i.e., KB HOME and Haverty Furniture go up and down completely randomly.
Pair Corralation between KB HOME and Haverty Furniture
Assuming the 90 days trading horizon KB HOME is expected to under-perform the Haverty Furniture. But the stock apears to be less risky and, when comparing its historical volatility, KB HOME is 1.43 times less risky than Haverty Furniture. The stock trades about -0.11 of its potential returns per unit of risk. The Haverty Furniture Companies is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,160 in Haverty Furniture Companies on November 28, 2024 and sell it today you would earn a total of 0.00 from holding Haverty Furniture Companies or generate 0.0% 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. Haverty Furniture Companies
Performance |
| Timeline |
| KB HOME |
| Haverty Furniture |
KB HOME and Haverty Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB HOME and Haverty Furniture
The main advantage of trading using opposite KB HOME and Haverty Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB HOME position performs unexpectedly, Haverty Furniture 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 Haverty Furniture will offset losses from the drop in Haverty Furniture's long position.| KB HOME vs. Transportadora de Gas | KB HOME vs. SOEDER SPORTFISKE AB | KB HOME vs. THAI BEVERAGE | KB HOME vs. UNIVMUSIC GRPADR050 |
| Haverty Furniture vs. CVR Medical Corp | Haverty Furniture vs. Semiconductor Manufacturing International | Haverty Furniture vs. Apyx Medical Corp | Haverty Furniture vs. Japan Medical Dynamic |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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