Correlation Between BorgWarner and JBG SMITH

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

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

Diversification Opportunities for BorgWarner and JBG SMITH

0.49

Correlation Coefficient

BorgWarner  JBG SMITH

Very weak diversification

The 3 months correlation between BorgWarner and JBG is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding BorgWarner and JBG SMITH Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBG SMITH Properties and BorgWarner 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 BorgWarner are associated (or correlated) with JBG SMITH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBG SMITH Properties has no effect on the direction of BorgWarner i.e., BorgWarner and JBG SMITH go up and down completely randomly.

Pair Corralation between BorgWarner and JBG SMITH

Considering the 90-day investment horizon BorgWarner is expected to under-perform the JBG SMITH. But the stock apears to be less risky and, when comparing its historical volatility, BorgWarner is 1.07 times less risky than JBG SMITH. The stock trades about -0.22 of its potential returns per unit of risk. The JBG SMITH Properties is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  1,667  in JBG SMITH Properties on September 26, 2024 and sell it today you would lose (109.00) from holding JBG SMITH Properties or give up 6.54% of portfolio value over 90 days.

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

BorgWarner  vs.  JBG SMITH Properties

BorgWarner

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BorgWarner has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

JBG SMITH Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JBG SMITH Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with BorgWarner and JBG SMITH

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

The idea behind BorgWarner and JBG SMITH Properties 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..