Correlation Between Forestar and Clipper Realty

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

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

Diversification Opportunities for Forestar and Clipper Realty

0.66

Correlation Coefficient

Forestar  Clipper Realty

Poor diversification

The 3 months correlation between Forestar and Clipper is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Forestar Group and Clipper Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clipper Realty 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 Clipper Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clipper Realty has no effect on the direction of Forestar i.e., Forestar and Clipper Realty go up and down completely randomly.

Pair Corralation between Forestar and Clipper Realty

Considering the 90-day investment horizon Forestar Group is expected to generate 0.79 times more return on investment than Clipper Realty. However, Forestar Group is 1.27 times less risky than Clipper Realty. It trades about 0.19 of its potential returns per unit of risk. Clipper Realty is currently generating about 0.05 per unit of risk. If you would invest  2,000  in Forestar Group on June 28, 2025 and sell it today you would earn a total of  636.00  from holding Forestar Group or generate 31.8% return on investment over 90 days.

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

Forestar Group  vs.  Clipper Realty

Forestar Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Forestar Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Forestar reported solid returns over the last few months and may actually be approaching a breakup point.

Clipper Realty

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Clipper Realty are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Clipper Realty may actually be approaching a critical reversion point that can send shares even higher in October 2025.

Pair Trading with Forestar and Clipper Realty

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

The idea behind Forestar Group and Clipper Realty 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.