Correlation Between KB HOME and UNITED RENTALS
Can any of the company-specific risk be diversified away by investing in both KB HOME and UNITED RENTALS 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 UNITED RENTALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KB HOME and UNITED RENTALS, you can compare the effects of market volatilities on KB HOME and UNITED RENTALS 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 UNITED RENTALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB HOME and UNITED RENTALS.
Diversification Opportunities for KB HOME and UNITED RENTALS
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KBH and UNITED is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding KB HOME and UNITED RENTALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED RENTALS 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 UNITED RENTALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED RENTALS has no effect on the direction of KB HOME i.e., KB HOME and UNITED RENTALS go up and down completely randomly.
Pair Corralation between KB HOME and UNITED RENTALS
Assuming the 90 days trading horizon KB HOME is expected to generate 0.74 times more return on investment than UNITED RENTALS. However, KB HOME is 1.35 times less risky than UNITED RENTALS. It trades about -0.18 of its potential returns per unit of risk. UNITED RENTALS is currently generating about -0.37 per unit of risk. If you would invest 6,350 in KB HOME on December 8, 2024 and sell it today you would lose (450.00) from holding KB HOME or give up 7.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB HOME vs. UNITED RENTALS
Performance |
| Timeline |
| KB HOME |
| UNITED RENTALS |
KB HOME and UNITED RENTALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB HOME and UNITED RENTALS
The main advantage of trading using opposite KB HOME and UNITED RENTALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB HOME position performs unexpectedly, UNITED RENTALS 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 UNITED RENTALS will offset losses from the drop in UNITED RENTALS's long position.| KB HOME vs. Loma Negra Compaa | KB HOME vs. Scandinavian Tobacco Group | KB HOME vs. Coeur Mining | KB HOME vs. MONEYSUPERMARKET |
| UNITED RENTALS vs. ONWARD MEDICAL BV | UNITED RENTALS vs. FARO Technologies | UNITED RENTALS vs. CREO MEDICAL GRP | UNITED RENTALS vs. GERATHERM MEDICAL |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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