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
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KBH and United is 0.29. 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 1.38 times less return on investment than United Rentals. But when comparing it to its historical volatility, KB HOME is 2.34 times less risky than United Rentals. It trades about 0.24 of its potential returns per unit of risk. United Rentals is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 74,092 in United Rentals on August 31, 2024 and sell it today you would earn a total of 7,808 from holding United Rentals or generate 10.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| 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' long position.| KB HOME vs. ASURE SOFTWARE | KB HOME vs. BJs Wholesale Club | KB HOME vs. NXP Semiconductors NV | KB HOME vs. JIAHUA STORES |
| United Rentals vs. FUYO GENERAL LEASE | United Rentals vs. Sumitomo Chemical | United Rentals vs. TIANDE CHEMICAL | United Rentals vs. Sanyo Chemical Industries |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |