Correlation Between Forestar and Cushman Wakefield

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

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

Diversification Opportunities for Forestar and Cushman Wakefield

0.87

Correlation Coefficient

Forestar  Cushman Wakefield

Very poor diversification

The 3 months correlation between Forestar and Cushman is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Forestar Group and Cushman Wakefield plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cushman Wakefield plc 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 Cushman Wakefield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cushman Wakefield plc has no effect on the direction of Forestar i.e., Forestar and Cushman Wakefield go up and down completely randomly.

Pair Corralation between Forestar and Cushman Wakefield

Considering the 90-day investment horizon Forestar Group is expected to generate 1.05 times more return on investment than Cushman Wakefield. However, Forestar is 1.05 times more volatile than Cushman Wakefield plc. It trades about 0.17 of its potential returns per unit of risk. Cushman Wakefield plc is currently generating about 0.13 per unit of risk. If you would invest  1,985  in Forestar Group on May 5, 2025 and sell it today you would earn a total of  530.00  from holding Forestar Group or generate 26.7% return on investment over 90 days.

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

Forestar Group  vs.  Cushman Wakefield plc

Forestar Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Forestar Group are ranked lower than 13 (%) 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.

Cushman Wakefield plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cushman Wakefield plc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Cushman Wakefield disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Forestar and Cushman Wakefield

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

The idea behind Forestar Group and Cushman Wakefield plc 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.