Correlation Between Corporate Office and KB HOME
Can any of the company-specific risk be diversified away by investing in both Corporate Office 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 Corporate Office and KB HOME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Office Properties and KB HOME, you can compare the effects of market volatilities on Corporate Office 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 Corporate Office with a short position of KB HOME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Office and KB HOME.
Diversification Opportunities for Corporate Office and KB HOME
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Corporate and KBH is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Office Properties and KB HOME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB HOME and Corporate Office 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 Corporate Office Properties 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 Corporate Office i.e., Corporate Office and KB HOME go up and down completely randomly.
Pair Corralation between Corporate Office and KB HOME
Assuming the 90 days horizon Corporate Office is expected to generate 1.35 times less return on investment than KB HOME. In addition to that, Corporate Office is 1.01 times more volatile than KB HOME. It trades about 0.16 of its total potential returns per unit of risk. KB HOME is currently generating about 0.22 per unit of volatility. If you would invest 7,226 in KB HOME on September 1, 2024 and sell it today you would earn a total of 574.00 from holding KB HOME or generate 7.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Corporate Office Properties vs. KB HOME
Performance |
| Timeline |
| Corporate Office Pro |
| KB HOME |
Corporate Office and KB HOME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporate Office and KB HOME
The main advantage of trading using opposite Corporate Office and KB HOME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Office 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.| Corporate Office vs. Clean Energy Fuels | Corporate Office vs. BJs Restaurants | Corporate Office vs. FRACTAL GAMING GROUP | Corporate Office vs. ANGLER GAMING PLC |
| KB HOME vs. ARISTOCRAT LEISURE | KB HOME vs. Khiron Life Sciences | KB HOME vs. BlueScope Steel Limited | KB HOME vs. KOOL2PLAY SA ZY |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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