Correlation Between Vista Outdoor and KB Home
Can any of the company-specific risk be diversified away by investing in both Vista Outdoor 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 Vista Outdoor and KB Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vista Outdoor and KB Home, you can compare the effects of market volatilities on Vista Outdoor 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 Vista Outdoor with a short position of KB Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vista Outdoor and KB Home.
Diversification Opportunities for Vista Outdoor and KB Home
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vista and KBH is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Vista Outdoor and KB Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Home and Vista Outdoor 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 Vista Outdoor 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 Vista Outdoor i.e., Vista Outdoor and KB Home go up and down completely randomly.
Pair Corralation between Vista Outdoor and KB Home
Given the investment horizon of 90 days Vista Outdoor is expected to generate 4.38 times less return on investment than KB Home. But when comparing it to its historical volatility, Vista Outdoor is 9.91 times less risky than KB Home. It trades about 0.29 of its potential returns per unit of risk. KB Home is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 7,812 in KB Home on August 31, 2024 and sell it today you would earn a total of 474.00 from holding KB Home or generate 6.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vista Outdoor vs. KB Home
Performance |
| Timeline |
| Vista Outdoor |
| KB Home |
Vista Outdoor and KB Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vista Outdoor and KB Home
The main advantage of trading using opposite Vista Outdoor and KB Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vista Outdoor 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.| Vista Outdoor vs. Clarus Corp | Vista Outdoor vs. Johnson Outdoors | Vista Outdoor vs. Escalade Incorporated | Vista Outdoor vs. JAKKS Pacific |
| KB Home vs. Century Communities | KB Home vs. Dream Finders Homes | KB Home vs. DR Horton | KB Home vs. Everus Construction Group |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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