When overlapping the two plots, we see that indeed Ryland suddenly became rich relative to its comp KBH. It was an opportunity to short RYL and go long KBH, with the hedge ratio given by the slope of the regression line above.
Saturday, December 26, 2009
KB Home and Ryland
The equities of KB Home and Ryland are strongly correlated. Still, market close on Dec 22 was an outlier.
When overlapping the two plots, we see that indeed Ryland suddenly became rich relative to its comp KBH. It was an opportunity to short RYL and go long KBH, with the hedge ratio given by the slope of the regression line above.
When overlapping the two plots, we see that indeed Ryland suddenly became rich relative to its comp KBH. It was an opportunity to short RYL and go long KBH, with the hedge ratio given by the slope of the regression line above.
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