Correlation Between Everus Construction and KB Home

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

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

Diversification Opportunities for Everus Construction and KB Home

0.41

Correlation Coefficient

Everus Construction  KB Home

Very weak diversification

The 3 months correlation between Everus and KBH is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Everus Construction Group and KB Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Home and Everus Construction 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 Everus Construction Group 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 Everus Construction i.e., Everus Construction and KB Home go up and down completely randomly.

Pair Corralation between Everus Construction and KB Home

Considering the 90-day investment horizon Everus Construction Group is expected to generate 1.95 times more return on investment than KB Home. However, Everus Construction is 1.95 times more volatile than KB Home. It trades about 0.27 of its potential returns per unit of risk. KB Home is currently generating about 0.03 per unit of risk. If you would invest  4,900  in Everus Construction Group on September 2, 2024 and sell it today you would earn a total of  1,466  from holding Everus Construction Group or generate 29.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	39.06%
Values	Daily Returns

Everus Construction Group  vs.  KB Home

Everus Construction

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Everus Construction Group are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Everus Construction reported solid returns over the last few months and may actually be approaching a breakup point.

KB Home

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KB Home are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, KB Home is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Everus Construction and KB Home

The main advantage of trading using opposite Everus Construction and KB Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everus Construction 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 Everus Construction Group 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.