Correlation Between Retail Estates and KB HOME
Can any of the company-specific risk be diversified away by investing in both Retail Estates and KB HOME 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 Retail Estates and KB HOME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Estates NV and KB HOME, you can compare the effects of market volatilities on Retail Estates and KB HOME 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 Retail Estates with a short position of KB HOME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and KB HOME.
Diversification Opportunities for Retail Estates and KB HOME
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Retail and KBH is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV and KB HOME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB HOME and Retail Estates 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 Retail Estates NV are associated (or correlated) with KB HOME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB HOME has no effect on the direction of Retail Estates i.e., Retail Estates and KB HOME go up and down completely randomly.
Pair Corralation between Retail Estates and KB HOME
Assuming the 90 days horizon Retail Estates NV is expected to generate 0.7 times more return on investment than KB HOME. However, Retail Estates NV is 1.43 times less risky than KB HOME. It trades about -0.13 of its potential returns per unit of risk. KB HOME is currently generating about -0.31 per unit of risk. If you would invest 5,840 in Retail Estates NV on October 16, 2024 and sell it today you would lose (140.00) from holding Retail Estates NV or give up 2.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Estates NV vs. KB HOME
Performance |
| Timeline |
| Retail Estates NV |
| KB HOME |
Retail Estates and KB HOME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Estates and KB HOME
The main advantage of trading using opposite Retail Estates and KB HOME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates position performs unexpectedly, KB HOME 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 KB HOME will offset losses from the drop in KB HOME's long position.| Retail Estates vs. Taiwan Semiconductor Manufacturing | Retail Estates vs. UNITED UTILITIES GR | Retail Estates vs. ON SEMICONDUCTOR | Retail Estates vs. RYU Apparel |
| KB HOME vs. SANOK RUBBER ZY | KB HOME vs. H2O Retailing | KB HOME vs. Retail Estates NV | KB HOME vs. FAST RETAIL ADR |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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