Correlation Between Rite Aid and KB HOME
Can any of the company-specific risk be diversified away by investing in both Rite Aid 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 Rite Aid and KB HOME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rite Aid and KB HOME, you can compare the effects of market volatilities on Rite Aid 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 Rite Aid with a short position of KB HOME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rite Aid and KB HOME.
Diversification Opportunities for Rite Aid and KB HOME
Pay attention - limited upside
The 3 months correlation between Rite and KBH is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Rite Aid and KB HOME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB HOME and Rite Aid 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 Rite Aid 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 Rite Aid i.e., Rite Aid and KB HOME go up and down completely randomly.
Pair Corralation between Rite Aid and KB HOME
If you would invest 7,325 in KB HOME on September 5, 2024 and sell it today you would earn a total of 525.00 from holding KB HOME or generate 7.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Rite Aid vs. KB HOME
Performance |
| Timeline |
| Rite Aid |
| KB HOME |
Rite Aid and KB HOME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rite Aid and KB HOME
The main advantage of trading using opposite Rite Aid and KB HOME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rite Aid 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.The idea behind Rite Aid and KB HOME 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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