Correlation Between KB Home and Mattel

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

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

Diversification Opportunities for KB Home and Mattel

-0.28

Correlation Coefficient

KB Home  Mattel

Very good diversification

The 3 months correlation between KBH and Mattel is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding KB Home and Mattel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mattel Inc 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 Mattel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mattel Inc has no effect on the direction of KB Home i.e., KB Home and Mattel go up and down completely randomly.

Pair Corralation between KB Home and Mattel

Considering the 90-day investment horizon KB Home is expected to generate 0.94 times more return on investment than Mattel. However, KB Home is 1.06 times less risky than Mattel. It trades about 0.15 of its potential returns per unit of risk. Mattel Inc is currently generating about -0.08 per unit of risk. If you would invest  5,256  in KB Home on July 4, 2025 and sell it today you would earn a total of  1,191  from holding KB Home or generate 22.66% 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.  Mattel Inc

KB Home

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KB Home are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental drivers, KB Home demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Mattel Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days Mattel Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in November 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with KB Home and Mattel

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

The idea behind KB Home and Mattel Inc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.