Correlation Between KB Home and VOXX International

Can any of the company-specific risk be diversified away by investing in both KB Home and VOXX 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 VOXX 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 VOXX International, you can compare the effects of market volatilities on KB Home and VOXX 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 VOXX International. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Home and VOXX International.

Diversification Opportunities for KB Home and VOXX International

-0.03

Correlation Coefficient

KB Home  VOXX International

Good diversification

The 3 months correlation between KBH and VOXX is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding KB Home and VOXX International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VOXX 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 VOXX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VOXX International has no effect on the direction of KB Home i.e., KB Home and VOXX International go up and down completely randomly.

Pair Corralation between KB Home and VOXX International

Considering the 90-day investment horizon KB Home is expected to under-perform the VOXX International. But the stock apears to be less risky and, when comparing its historical volatility, KB Home is 1.36 times less risky than VOXX International. The stock trades about -0.13 of its potential returns per unit of risk. The VOXX International is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  663.00  in VOXX International on November 19, 2024 and sell it today you would earn a total of  84.00  from holding VOXX International or generate 12.67% return on investment over 90 days.

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

KB Home  vs.  VOXX International

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 inconsistent performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

VOXX International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VOXX International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, VOXX International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KB Home and VOXX International

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

The idea behind KB Home and VOXX International 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.