Correlation Between CBL Associates and Forestar

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

By analyzing existing cross correlation between CBL Associates Properties and Forestar Group, you can compare the effects of market volatilities on CBL Associates and Forestar 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 CBL Associates with a short position of Forestar. Check out your portfolio center. Please also check ongoing floating volatility patterns of CBL Associates and Forestar.

Diversification Opportunities for CBL Associates and Forestar

-0.69

Correlation Coefficient

CBL Associates  Forestar

Excellent diversification

The 3 months correlation between CBL and Forestar is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding CBL Associates Properties and Forestar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forestar Group and CBL Associates 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 CBL Associates Properties are associated (or correlated) with Forestar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forestar Group has no effect on the direction of CBL Associates i.e., CBL Associates and Forestar go up and down completely randomly.

Pair Corralation between CBL Associates and Forestar

Considering the 90-day investment horizon CBL Associates is expected to generate 1.03 times less return on investment than Forestar. But when comparing it to its historical volatility, CBL Associates Properties is 1.92 times less risky than Forestar. It trades about 0.09 of its potential returns per unit of risk. Forestar Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,065  in Forestar Group on September 12, 2024 and sell it today you would earn a total of  760.00  from holding Forestar Group or generate 36.8% return on investment over 90 days.

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

CBL Associates Properties  vs.  Forestar Group

CBL Associates Properties

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CBL Associates Properties are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, CBL Associates disclosed solid returns over the last few months and may actually be approaching a breakup point.

Forestar Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forestar Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with CBL Associates and Forestar

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

The idea behind CBL Associates Properties and Forestar Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.