Correlation Between KB HOME and Algonquin Power
Can any of the company-specific risk be diversified away by investing in both KB HOME and Algonquin Power 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 Algonquin Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KB HOME and Algonquin Power Utilities, you can compare the effects of market volatilities on KB HOME and Algonquin Power 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 Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB HOME and Algonquin Power.
Diversification Opportunities for KB HOME and Algonquin Power
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KBH and Algonquin is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding KB HOME and Algonquin Power Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algonquin Power Utilities 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 Algonquin Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algonquin Power Utilities has no effect on the direction of KB HOME i.e., KB HOME and Algonquin Power go up and down completely randomly.
Pair Corralation between KB HOME and Algonquin Power
Assuming the 90 days trading horizon KB HOME is expected to generate 1.18 times more return on investment than Algonquin Power. However, KB HOME is 1.18 times more volatile than Algonquin Power Utilities. It trades about 0.07 of its potential returns per unit of risk. Algonquin Power Utilities is currently generating about -0.03 per unit of risk. If you would invest 3,250 in KB HOME on October 15, 2024 and sell it today you would earn a total of 2,850 from holding KB HOME or generate 87.69% 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. Algonquin Power Utilities
Performance |
| Timeline |
| KB HOME |
| Algonquin Power Utilities |
KB HOME and Algonquin Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB HOME and Algonquin Power
The main advantage of trading using opposite KB HOME and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB HOME position performs unexpectedly, Algonquin Power 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 Algonquin Power will offset losses from the drop in Algonquin Power's long position.| KB HOME vs. SANOK RUBBER ZY | KB HOME vs. H2O Retailing | KB HOME vs. Retail Estates NV | KB HOME vs. FAST RETAIL ADR |
| Algonquin Power vs. Calibre Mining Corp | Algonquin Power vs. MAGNUM MINING EXP | Algonquin Power vs. Highlight Communications AG | Algonquin Power vs. Zoom Video 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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