Correlation Between Boston Properties and JBG SMITH

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Can any of the company-specific risk be diversified away by investing in both Boston Properties 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 Boston Properties and JBG SMITH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Properties and JBG SMITH Properties, you can compare the effects of market volatilities on Boston Properties 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 Boston Properties with a short position of JBG SMITH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Properties and JBG SMITH.

Diversification Opportunities for Boston Properties and JBG SMITH

0.36
  Correlation Coefficient

Weak diversification

The 3 months correlation between Boston and JBG is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties 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 Boston Properties 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 Boston Properties 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 Boston Properties i.e., Boston Properties and JBG SMITH go up and down completely randomly.

Pair Corralation between Boston Properties and JBG SMITH

Considering the 90-day investment horizon Boston Properties is expected to generate 0.66 times more return on investment than JBG SMITH. However, Boston Properties is 1.51 times less risky than JBG SMITH. It trades about -0.1 of its potential returns per unit of risk. JBG SMITH Properties is currently generating about -0.09 per unit of risk. If you would invest  8,619  in Boston Properties on August 30, 2024 and sell it today you would lose (333.00) from holding Boston Properties or give up 3.86% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Boston Properties  vs.  JBG SMITH Properties

 Performance 
       Timeline  
Boston Properties 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Boston Properties are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Boston Properties may actually be approaching a critical reversion point that can send shares even higher in December 2024.
JBG SMITH Properties 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 comparatively stable technical and fundamental indicators, JBG SMITH is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Boston Properties and JBG SMITH Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Boston Properties and JBG SMITH

The main advantage of trading using opposite Boston Properties and JBG SMITH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Properties 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 Boston Properties 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.
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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