Correlation Between KB HOME and ESSILORLUXOTTICA
Can any of the company-specific risk be diversified away by investing in both KB HOME and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KB HOME and ESSILORLUXOTTICA 12ON, you can compare the effects of market volatilities on KB HOME and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB HOME and ESSILORLUXOTTICA.
Diversification Opportunities for KB HOME and ESSILORLUXOTTICA
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KBH and ESSILORLUXOTTICA is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding KB HOME and ESSILORLUXOTTICA 12ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSILORLUXOTTICA 12ON 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 ESSILORLUXOTTICA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSILORLUXOTTICA 12ON has no effect on the direction of KB HOME i.e., KB HOME and ESSILORLUXOTTICA go up and down completely randomly.
Pair Corralation between KB HOME and ESSILORLUXOTTICA
Assuming the 90 days trading horizon KB HOME is expected to generate 1.64 times more return on investment than ESSILORLUXOTTICA. However, KB HOME is 1.64 times more volatile than ESSILORLUXOTTICA 12ON. It trades about 0.1 of its potential returns per unit of risk. ESSILORLUXOTTICA 12ON is currently generating about 0.05 per unit of risk. If you would invest 2,985 in KB HOME on September 5, 2024 and sell it today you would earn a total of 4,865 from holding KB HOME or generate 162.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
KB HOME vs. ESSILORLUXOTTICA 12ON
Performance |
| Timeline |
| KB HOME |
| ESSILORLUXOTTICA 12ON |
KB HOME and ESSILORLUXOTTICA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB HOME and ESSILORLUXOTTICA
The main advantage of trading using opposite KB HOME and ESSILORLUXOTTICA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB HOME position performs unexpectedly, ESSILORLUXOTTICA 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 ESSILORLUXOTTICA will offset losses from the drop in ESSILORLUXOTTICA's long position.The idea behind KB HOME and ESSILORLUXOTTICA 12ON pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ESSILORLUXOTTICA vs. Intuitive Surgical | ESSILORLUXOTTICA vs. Becton Dickinson and | ESSILORLUXOTTICA vs. Resmed Inc DRC | ESSILORLUXOTTICA vs. Sartorius Stedim Biotech |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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