Correlation Between KB Home and Taylor Morn

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

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

Diversification Opportunities for KB Home and Taylor Morn

0.83

Correlation Coefficient

KB Home  Taylor Morn

Very poor diversification

The 3 months correlation between KBH and Taylor is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding KB Home and Taylor Morn Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taylor Morn Home 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 Taylor Morn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taylor Morn Home has no effect on the direction of KB Home i.e., KB Home and Taylor Morn go up and down completely randomly.

Pair Corralation between KB Home and Taylor Morn

Considering the 90-day investment horizon KB Home is expected to generate 1.05 times more return on investment than Taylor Morn. However, KB Home is 1.05 times more volatile than Taylor Morn Home. It trades about 0.12 of its potential returns per unit of risk. Taylor Morn Home is currently generating about 0.11 per unit of risk. If you would invest  5,373  in KB Home on May 17, 2025 and sell it today you would earn a total of  930.00  from holding KB Home or generate 17.31% return on investment over 90 days.

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

KB Home  vs.  Taylor Morn Home

KB Home

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in KB Home are ranked lower than 9 (%) 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.

Taylor Morn Home

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Taylor Morn Home are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical indicators, Taylor Morn exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KB Home and Taylor Morn

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

The idea behind KB Home and Taylor Morn 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.