Correlation Between KB HOME and Stanley Electric
Can any of the company-specific risk be diversified away by investing in both KB HOME and Stanley Electric 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 Stanley Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KB HOME and Stanley Electric Co, you can compare the effects of market volatilities on KB HOME and Stanley Electric 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 Stanley Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB HOME and Stanley Electric.
Diversification Opportunities for KB HOME and Stanley Electric
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KBH and Stanley is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding KB HOME and Stanley Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stanley Electric 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 Stanley Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stanley Electric has no effect on the direction of KB HOME i.e., KB HOME and Stanley Electric go up and down completely randomly.
Pair Corralation between KB HOME and Stanley Electric
Assuming the 90 days trading horizon KB HOME is expected to under-perform the Stanley Electric. In addition to that, KB HOME is 1.35 times more volatile than Stanley Electric Co. It trades about -0.57 of its total potential returns per unit of risk. Stanley Electric Co is currently generating about -0.09 per unit of volatility. If you would invest 1,570 in Stanley Electric Co on September 27, 2024 and sell it today you would lose (40.00) from holding Stanley Electric Co or give up 2.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB HOME vs. Stanley Electric Co
Performance |
| Timeline |
| KB HOME |
| Stanley Electric |
KB HOME and Stanley Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB HOME and Stanley Electric
The main advantage of trading using opposite KB HOME and Stanley Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB HOME position performs unexpectedly, Stanley Electric 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 Stanley Electric will offset losses from the drop in Stanley Electric's long position.The idea behind KB HOME and Stanley Electric Co 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.| Stanley Electric vs. Plastic Omnium | Stanley Electric vs. THRACE PLASTICS | Stanley Electric vs. BJs Restaurants | Stanley Electric vs. AUSNUTRIA DAIRY |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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