Correlation Between KB Home and MDC Holdings
Can any of the company-specific risk be diversified away by investing in both KB Home and MDC Holdings 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 MDC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KB Home and MDC Holdings, you can compare the effects of market volatilities on KB Home and MDC Holdings 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 MDC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Home and MDC Holdings.
Diversification Opportunities for KB Home and MDC Holdings
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KBH and MDC is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding KB Home and MDC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MDC Holdings 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 MDC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MDC Holdings has no effect on the direction of KB Home i.e., KB Home and MDC Holdings go up and down completely randomly.
Pair Corralation between KB Home and MDC Holdings
If you would invest 5,146 in KB Home on August 24, 2024 and sell it today you would earn a total of 2,760 from holding KB Home or generate 53.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 0.4% |
| Values | Daily Returns |
KB Home vs. MDC Holdings
Performance |
| Timeline |
| KB Home |
| MDC Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
KB Home and MDC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Home and MDC Holdings
The main advantage of trading using opposite KB Home and MDC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Home position performs unexpectedly, MDC Holdings 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 MDC Holdings will offset losses from the drop in MDC Holdings' long position.The idea behind KB Home and MDC Holdings 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.| MDC Holdings vs. Taylor Morn Home | MDC Holdings vs. Century Communities | MDC Holdings vs. Beazer Homes USA | MDC Holdings vs. Meritage |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Transaction History View history of all your transactions and understand their impact on performance |