Correlation Between Eastern and JBG SMITH

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

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

Diversification Opportunities for Eastern and JBG SMITH

0.81

Correlation Coefficient

Eastern  JBG SMITH

Very poor diversification

The 3 months correlation between Eastern and JBG is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co 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 Eastern 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 Eastern Co 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 Eastern i.e., Eastern and JBG SMITH go up and down completely randomly.

Pair Corralation between Eastern and JBG SMITH

Considering the 90-day investment horizon Eastern Co is expected to generate 1.6 times more return on investment than JBG SMITH. However, Eastern is 1.6 times more volatile than JBG SMITH Properties. It trades about 0.06 of its potential returns per unit of risk. JBG SMITH Properties is currently generating about 0.0 per unit of risk. If you would invest  2,072  in Eastern Co on September 13, 2024 and sell it today you would earn a total of  825.00  from holding Eastern Co or generate 39.82% return on investment over 90 days.

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

Eastern Co  vs.  JBG SMITH Properties

Eastern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Eastern is not utilizing all of its potentials. The latest 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 Eastern and JBG SMITH

The main advantage of trading using opposite Eastern and JBG SMITH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern 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 Eastern Co 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.