Correlation Between Highwoods Properties and JBG SMITH

Can any of the company-specific risk be diversified away by investing in both Highwoods 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 Highwoods 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 Highwoods Properties and JBG SMITH Properties, you can compare the effects of market volatilities on Highwoods 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 Highwoods Properties with a short position of JBG SMITH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highwoods Properties and JBG SMITH.

Diversification Opportunities for Highwoods Properties and JBG SMITH

0.61

Correlation Coefficient

Highwoods Properties  JBG SMITH

Poor diversification

The 3 months correlation between Highwoods and JBG is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Highwoods 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 Highwoods 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 Highwoods 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 Highwoods Properties i.e., Highwoods Properties and JBG SMITH go up and down completely randomly.

Pair Corralation between Highwoods Properties and JBG SMITH

Considering the 90-day investment horizon Highwoods Properties is expected to generate 0.69 times more return on investment than JBG SMITH. However, Highwoods Properties is 1.46 times less risky than JBG SMITH. It trades about 0.04 of its potential returns per unit of risk. JBG SMITH Properties is currently generating about -0.02 per unit of risk. If you would invest  3,171  in Highwoods Properties on August 30, 2024 and sell it today you would earn a total of  74.00  from holding Highwoods Properties or generate 2.33% return on investment over 90 days.

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

Highwoods Properties  vs.  JBG SMITH Properties

Highwoods Properties

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Highwoods Properties are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward indicators, Highwoods Properties is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated 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 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.

Pair Trading with Highwoods Properties and JBG SMITH

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