Correlation Between KB HOME and Rite Aid

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Can any of the company-specific risk be diversified away by investing in both KB HOME and Rite Aid 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 Rite Aid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KB HOME and Rite Aid, you can compare the effects of market volatilities on KB HOME and Rite Aid 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 Rite Aid. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB HOME and Rite Aid.

Diversification Opportunities for KB HOME and Rite Aid

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between KBH and Rite is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding KB HOME and Rite Aid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rite Aid 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 Rite Aid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rite Aid has no effect on the direction of KB HOME i.e., KB HOME and Rite Aid go up and down completely randomly.

Pair Corralation between KB HOME and Rite Aid

If you would invest  7,425  in KB HOME on September 6, 2024 and sell it today you would earn a total of  75.00  from holding KB HOME or generate 1.01% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy91.3%
ValuesDaily Returns

KB HOME  vs.  Rite Aid

 Performance 
       Timeline  
KB HOME 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in KB HOME are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, KB HOME may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Rite Aid 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Rite Aid has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Rite Aid is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

KB HOME and Rite Aid Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KB HOME and Rite Aid

The main advantage of trading using opposite KB HOME and Rite Aid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB HOME position performs unexpectedly, Rite Aid 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 Rite Aid will offset losses from the drop in Rite Aid's long position.
The idea behind KB HOME and Rite Aid 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.
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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