Correlation Between KB Home and Carters

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

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

Diversification Opportunities for KB Home and Carters

-0.36

Correlation Coefficient

KB Home  Carters

Very good diversification

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

Pair Corralation between KB Home and Carters

Considering the 90-day investment horizon KB Home is expected to generate 0.64 times more return on investment than Carters. However, KB Home is 1.57 times less risky than Carters. It trades about 0.06 of its potential returns per unit of risk. Carters is currently generating about -0.12 per unit of risk. If you would invest  5,576  in KB Home on May 13, 2025 and sell it today you would earn a total of  382.00  from holding KB Home or generate 6.85% 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.  Carters

KB Home

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in KB Home are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental drivers, KB Home may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Carters

Risk-Adjusted Performance

Weakest

Over the last 90 days Carters has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in September 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with KB Home and Carters

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

The idea behind KB Home and Carters 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.