Correlation Between KB HOME and Sporttotal
Can any of the company-specific risk be diversified away by investing in both KB HOME and Sporttotal 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 Sporttotal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KB HOME and Sporttotal AG, you can compare the effects of market volatilities on KB HOME and Sporttotal 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 Sporttotal. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB HOME and Sporttotal.
Diversification Opportunities for KB HOME and Sporttotal
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KBH and Sporttotal is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding KB HOME and Sporttotal AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sporttotal AG 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 Sporttotal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sporttotal AG has no effect on the direction of KB HOME i.e., KB HOME and Sporttotal go up and down completely randomly.
Pair Corralation between KB HOME and Sporttotal
Assuming the 90 days trading horizon KB HOME is expected to generate 0.17 times more return on investment than Sporttotal. However, KB HOME is 6.0 times less risky than Sporttotal. It trades about -0.23 of its potential returns per unit of risk. Sporttotal AG is currently generating about -0.11 per unit of risk. If you would invest 7,400 in KB HOME on September 18, 2024 and sell it today you would lose (750.00) from holding KB HOME or give up 10.14% 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. Sporttotal AG
Performance |
| Timeline |
| KB HOME |
| Sporttotal AG |
KB HOME and Sporttotal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB HOME and Sporttotal
The main advantage of trading using opposite KB HOME and Sporttotal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB HOME position performs unexpectedly, Sporttotal 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 Sporttotal will offset losses from the drop in Sporttotal's long position.The idea behind KB HOME and Sporttotal AG 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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