Correlation Between KB Home and Dogness International

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

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

Diversification Opportunities for KB Home and Dogness International

0.34

Correlation Coefficient

KB Home  Dogness International

Weak diversification

The 3 months correlation between KBH and Dogness is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding KB Home and Dogness International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dogness International 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 Dogness International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dogness International has no effect on the direction of KB Home i.e., KB Home and Dogness International go up and down completely randomly.

Pair Corralation between KB Home and Dogness International

Considering the 90-day investment horizon KB Home is expected to under-perform the Dogness International. But the stock apears to be less risky and, when comparing its historical volatility, KB Home is 6.09 times less risky than Dogness International. The stock trades about -0.07 of its potential returns per unit of risk. The Dogness International Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,483  in Dogness International Corp on December 28, 2024 and sell it today you would lose (1,726) from holding Dogness International Corp or give up 38.5% of portfolio value over 90 days.

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

KB Home  vs.  Dogness International Corp

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. Despite latest inconsistent performance, the Stock's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Dogness International

Risk-Adjusted Performance

Weak

Over the last 90 days Dogness International Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak technical and fundamental indicators, Dogness International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with KB Home and Dogness International

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

The idea behind KB Home and Dogness International Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.