Correlation Between Estee Lauder and JBG SMITH

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

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

Diversification Opportunities for Estee Lauder and JBG SMITH

0.68

Correlation Coefficient

Estee Lauder  JBG SMITH

Poor diversification

The 3 months correlation between Estee and JBG is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies 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 Estee Lauder 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 Estee Lauder Companies 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 Estee Lauder i.e., Estee Lauder and JBG SMITH go up and down completely randomly.

Pair Corralation between Estee Lauder and JBG SMITH

Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to generate 2.14 times more return on investment than JBG SMITH. However, Estee Lauder is 2.14 times more volatile than JBG SMITH Properties. It trades about 0.0 of its potential returns per unit of risk. JBG SMITH Properties is currently generating about -0.1 per unit of risk. If you would invest  8,473  in Estee Lauder Companies on September 16, 2024 and sell it today you would lose (469.00) from holding Estee Lauder Companies or give up 5.54% of portfolio value over 90 days.

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

Estee Lauder Companies  vs.  JBG SMITH Properties

Estee Lauder Companies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Estee Lauder Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Estee Lauder is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional 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 weak 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 Estee Lauder and JBG SMITH

The main advantage of trading using opposite Estee Lauder and JBG SMITH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder 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 Estee Lauder Companies 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.