Correlation Between Xenia Hotels and KB HOME

Can any of the company-specific risk be diversified away by investing in both Xenia Hotels 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 Xenia Hotels and KB HOME into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xenia Hotels Resorts and KB HOME, you can compare the effects of market volatilities on Xenia Hotels 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 Xenia Hotels with a short position of KB HOME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xenia Hotels and KB HOME.

Diversification Opportunities for Xenia Hotels and KB HOME

-0.12

Correlation Coefficient

Xenia Hotels  KB HOME

Good diversification

The 3 months correlation between Xenia and KBH is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Xenia Hotels Resorts and KB HOME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB HOME and Xenia Hotels 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 Xenia Hotels Resorts 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 Xenia Hotels i.e., Xenia Hotels and KB HOME go up and down completely randomly.

Pair Corralation between Xenia Hotels and KB HOME

Assuming the 90 days trading horizon Xenia Hotels Resorts is expected to generate 0.9 times more return on investment than KB HOME. However, Xenia Hotels Resorts is 1.11 times less risky than KB HOME. It trades about 0.17 of its potential returns per unit of risk. KB HOME is currently generating about -0.08 per unit of risk. If you would invest  1,229  in Xenia Hotels Resorts on September 16, 2024 and sell it today you would earn a total of  291.00  from holding Xenia Hotels Resorts or generate 23.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Xenia Hotels Resorts  vs.  KB HOME

Xenia Hotels Resorts

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xenia Hotels Resorts are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Xenia Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

KB HOME

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KB HOME has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Xenia Hotels and KB HOME

The main advantage of trading using opposite Xenia Hotels and KB HOME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xenia Hotels 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 Xenia Hotels Resorts 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.