Correlation Between GGE Old and Forestar

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

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

Diversification Opportunities for GGE Old and Forestar

0.85

Correlation Coefficient

GGE Old  Forestar

Very poor diversification

The 3 months correlation between GGE and Forestar is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding GGE Old and Forestar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forestar Group and GGE Old 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 GGE Old 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 GGE Old i.e., GGE Old and Forestar go up and down completely randomly.

Pair Corralation between GGE Old and Forestar

If you would invest  193.00  in GGE Old on October 25, 2024 and sell it today you would earn a total of  0.00  from holding GGE Old or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	5.26%
Values	Daily Returns

GGE Old  vs.  Forestar Group

GGE Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GGE Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, GGE Old is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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

Pair Trading with GGE Old and Forestar

The main advantage of trading using opposite GGE Old and Forestar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GGE Old 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 GGE Old 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.