Correlation Between Forestar and Belpointe PREP

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

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

Diversification Opportunities for Forestar and Belpointe PREP

0.31

Correlation Coefficient

Forestar  Belpointe PREP

Weak diversification

The 3 months correlation between Forestar and Belpointe is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Forestar Group and Belpointe PREP LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belpointe PREP LLC and Forestar 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 Forestar Group are associated (or correlated) with Belpointe PREP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belpointe PREP LLC has no effect on the direction of Forestar i.e., Forestar and Belpointe PREP go up and down completely randomly.

Pair Corralation between Forestar and Belpointe PREP

Considering the 90-day investment horizon Forestar Group is expected to under-perform the Belpointe PREP. But the stock apears to be less risky and, when comparing its historical volatility, Forestar Group is 1.31 times less risky than Belpointe PREP. The stock trades about -0.12 of its potential returns per unit of risk. The Belpointe PREP LLC is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  7,600  in Belpointe PREP LLC on December 29, 2024 and sell it today you would lose (1,088) from holding Belpointe PREP LLC or give up 14.32% of portfolio value over 90 days.

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

Forestar Group  vs.  Belpointe PREP LLC

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.

Belpointe PREP LLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Belpointe PREP LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Forestar and Belpointe PREP

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

The idea behind Forestar Group and Belpointe PREP LLC 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.