Correlation Between AstroNova and Forestar

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

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

Diversification Opportunities for AstroNova and Forestar

0.75

Correlation Coefficient

AstroNova  Forestar

Poor diversification

The 3 months correlation between AstroNova and Forestar is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding AstroNova and Forestar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forestar Group and AstroNova 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 AstroNova 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 AstroNova i.e., AstroNova and Forestar go up and down completely randomly.

Pair Corralation between AstroNova and Forestar

Given the investment horizon of 90 days AstroNova is expected to generate 1.51 times more return on investment than Forestar. However, AstroNova is 1.51 times more volatile than Forestar Group. It trades about 0.12 of its potential returns per unit of risk. Forestar Group is currently generating about 0.16 per unit of risk. If you would invest  890.00  in AstroNova on May 2, 2025 and sell it today you would earn a total of  245.00  from holding AstroNova or generate 27.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

AstroNova  vs.  Forestar Group

AstroNova

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AstroNova are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, AstroNova unveiled solid returns over the last few months and may actually be approaching a breakup point.

Forestar Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Forestar Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Forestar reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AstroNova and Forestar

The main advantage of trading using opposite AstroNova and Forestar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AstroNova 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 AstroNova 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.