Correlation Between KB HOME and Apple

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

By analyzing existing cross correlation between KB HOME and Apple Inc, you can compare the effects of market volatilities on KB HOME and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB HOME and Apple.

Diversification Opportunities for KB HOME and Apple

0.55

Correlation Coefficient

KB HOME  Apple

Very weak diversification

The 3 months correlation between KBH and Apple is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding KB HOME and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of KB HOME i.e., KB HOME and Apple go up and down completely randomly.

Pair Corralation between KB HOME and Apple

Assuming the 90 days trading horizon KB HOME is expected to generate 1.15 times more return on investment than Apple. However, KB HOME is 1.15 times more volatile than Apple Inc. It trades about -0.11 of its potential returns per unit of risk. Apple Inc is currently generating about -0.15 per unit of risk. If you would invest  6,177  in KB HOME on December 28, 2024 and sell it today you would lose (827.00) from holding KB HOME or give up 13.39% of portfolio value over 90 days.

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

KB HOME  vs.  Apple Inc

KB HOME

Risk-Adjusted Performance

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Apple Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with KB HOME and Apple

The main advantage of trading using opposite KB HOME and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB HOME position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.

The idea behind KB HOME and Apple Inc 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.