Correlation Between CBRE Group and Forestar

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

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

Diversification Opportunities for CBRE Group and Forestar

-0.18

Correlation Coefficient

CBRE Group  Forestar

Good diversification

The 3 months correlation between CBRE and Forestar is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding CBRE Group Class and Forestar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forestar Group and CBRE Group 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 CBRE Group Class 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 CBRE Group i.e., CBRE Group and Forestar go up and down completely randomly.

Pair Corralation between CBRE Group and Forestar

Given the investment horizon of 90 days CBRE Group Class is expected to generate 0.86 times more return on investment than Forestar. However, CBRE Group Class is 1.17 times less risky than Forestar. It trades about 0.02 of its potential returns per unit of risk. Forestar Group is currently generating about -0.1 per unit of risk. If you would invest  13,200  in CBRE Group Class on December 25, 2024 and sell it today you would earn a total of  187.00  from holding CBRE Group Class or generate 1.42% return on investment over 90 days.

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

CBRE Group Class  vs.  Forestar Group

CBRE Group Class

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CBRE Group Class are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, CBRE Group is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Forestar Group

Risk-Adjusted Performance

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 conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with CBRE Group and Forestar

The main advantage of trading using opposite CBRE Group and Forestar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CBRE Group 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 CBRE Group Class 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.

Check out your portfolio center.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.