Correlation Between KB Home and Verizon Communications
Can any of the company-specific risk be diversified away by investing in both KB Home and Verizon Communications 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 KB Home and Verizon Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KB Home and Verizon Communications, you can compare the effects of market volatilities on KB Home and Verizon Communications 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 KB Home with a short position of Verizon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Home and Verizon Communications.
Diversification Opportunities for KB Home and Verizon Communications
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between KBH and Verizon is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding KB Home and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and KB Home 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 KB Home are associated (or correlated) with Verizon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of KB Home i.e., KB Home and Verizon Communications go up and down completely randomly.
Pair Corralation between KB Home and Verizon Communications
Assuming the 90 days trading horizon KB Home is expected to generate 1.08 times more return on investment than Verizon Communications. However, KB Home is 1.08 times more volatile than Verizon Communications. It trades about 0.06 of its potential returns per unit of risk. Verizon Communications is currently generating about -0.02 per unit of risk. If you would invest 67,200 in KB Home on February 21, 2024 and sell it today you would earn a total of 38,300 from holding KB Home or generate 56.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
KB Home vs. Verizon Communications
Performance |
Timeline |
KB Home |
Verizon Communications |
KB Home and Verizon Communications Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KB Home and Verizon Communications
The main advantage of trading using opposite KB Home and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Home position performs unexpectedly, Verizon Communications 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 Verizon Communications will offset losses from the drop in Verizon Communications' long position.KB Home vs. Lennar | KB Home vs. PulteGroup | KB Home vs. Servicios Corporativos Javer | KB Home vs. Desarrolladora Homex SAB |
Verizon Communications vs. United Airlines Holdings | Verizon Communications vs. GMxico Transportes SAB | Verizon Communications vs. New Oriental Education | Verizon Communications vs. FibraHotel |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |