Correlation Between KB HOME and Webster Financial

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

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

Diversification Opportunities for KB HOME and Webster Financial

0.36

Correlation Coefficient

KB HOME  Webster Financial

Weak diversification

The 3 months correlation between KBH and Webster is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding KB HOME and Webster Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webster Financial 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 Webster Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Webster Financial has no effect on the direction of KB HOME i.e., KB HOME and Webster Financial go up and down completely randomly.

Pair Corralation between KB HOME and Webster Financial

Assuming the 90 days trading horizon KB HOME is expected to under-perform the Webster Financial. In addition to that, KB HOME is 1.36 times more volatile than Webster Financial. It trades about 0.0 of its total potential returns per unit of risk. Webster Financial is currently generating about 0.08 per unit of volatility. If you would invest  4,460  in Webster Financial on May 10, 2025 and sell it today you would earn a total of  380.00  from holding Webster Financial or generate 8.52% return on investment over 90 days.

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

KB HOME  vs.  Webster Financial

KB HOME

Risk-Adjusted Performance

Weakest

Over the last 90 days KB HOME has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, KB HOME is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Webster Financial

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Webster Financial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Webster Financial may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with KB HOME and Webster Financial

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

The idea behind KB HOME and Webster Financial 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.