Correlation Between UBS Group and KB Home
Can any of the company-specific risk be diversified away by investing in both UBS Group 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 UBS Group and KB Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS Group AG and KB Home, you can compare the effects of market volatilities on UBS Group 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 UBS Group with a short position of KB Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS Group and KB Home.
Diversification Opportunities for UBS Group and KB Home
Very weak diversification
The 3 months correlation between UBS and KBH is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding UBS Group AG and KB Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Home and UBS Group 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 UBS Group AG 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 UBS Group i.e., UBS Group and KB Home go up and down completely randomly.
Pair Corralation between UBS Group and KB Home
Assuming the 90 days trading horizon UBS Group AG is expected to generate 0.18 times more return on investment than KB Home. However, UBS Group AG is 5.54 times less risky than KB Home. It trades about 0.22 of its potential returns per unit of risk. KB Home is currently generating about -0.21 per unit of risk. If you would invest 64,400 in UBS Group AG on September 1, 2024 and sell it today you would earn a total of 849.00 from holding UBS Group AG or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UBS Group AG vs. KB Home
Performance |
| Timeline |
| UBS Group AG |
| KB Home |
UBS Group and KB Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBS Group and KB Home
The main advantage of trading using opposite UBS Group and KB Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS Group 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.| UBS Group vs. ING Groep NV | UBS Group vs. iShares Global Timber | UBS Group vs. Vanguard World | UBS Group vs. iShares Trust |
| KB Home vs. Lennar | KB Home vs. Desarrolladora Homex SAB | KB Home vs. Urbi Desarrollos Urbanos | KB Home vs. Sare Holding SAB |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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