Correlation Between KB HOME and Fidelity National

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

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

Diversification Opportunities for KB HOME and Fidelity National

0.01

Correlation Coefficient

KB HOME  Fidelity National

Significant diversification

The 3 months correlation between KBH and Fidelity is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding KB HOME and Fidelity National Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National 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 Fidelity National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity National has no effect on the direction of KB HOME i.e., KB HOME and Fidelity National go up and down completely randomly.

Pair Corralation between KB HOME and Fidelity National

Assuming the 90 days trading horizon KB HOME is expected to under-perform the Fidelity National. In addition to that, KB HOME is 1.94 times more volatile than Fidelity National Information. It trades about -0.14 of its total potential returns per unit of risk. Fidelity National Information is currently generating about 0.05 per unit of volatility. If you would invest  7,461  in Fidelity National Information on September 23, 2024 and sell it today you would earn a total of  244.00  from holding Fidelity National Information or generate 3.27% 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.  Fidelity National Information

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

Fidelity National

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity National Information are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fidelity National is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with KB HOME and Fidelity National

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

The idea behind KB HOME and Fidelity National Information 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.