Correlation Between Thermon Group and Forestar
Can any of the company-specific risk be diversified away by investing in both Thermon Group 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 Thermon Group and Forestar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thermon Group Holdings and Forestar Group, you can compare the effects of market volatilities on Thermon Group 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 Thermon Group with a short position of Forestar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermon Group and Forestar.
Diversification Opportunities for Thermon Group and Forestar
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Thermon and Forestar is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Thermon Group Holdings and Forestar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forestar Group and Thermon Group 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 Thermon Group Holdings 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 Thermon Group i.e., Thermon Group and Forestar go up and down completely randomly.
Pair Corralation between Thermon Group and Forestar
Considering the 90-day investment horizon Thermon Group Holdings is expected to generate 1.21 times more return on investment than Forestar. However, Thermon Group is 1.21 times more volatile than Forestar Group. It trades about 0.06 of its potential returns per unit of risk. Forestar Group is currently generating about 0.01 per unit of risk. If you would invest 3,024 in Thermon Group Holdings on August 28, 2024 and sell it today you would earn a total of 200.00 from holding Thermon Group Holdings or generate 6.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thermon Group Holdings vs. Forestar Group
Performance |
| Timeline |
| Thermon Group Holdings |
| Forestar Group |
Thermon Group and Forestar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thermon Group and Forestar
The main advantage of trading using opposite Thermon Group and Forestar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thermon Group 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.| Thermon Group vs. Hurco Companies | Thermon Group vs. Enerpac Tool Group | Thermon Group vs. Enpro Industries | Thermon Group vs. Omega Flex |
| Forestar vs. American Realty Investors | Forestar vs. Landsea Homes Corp | Forestar vs. Five Point Holdings | Forestar vs. AMREP |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |