Correlation Between JBG SMITH and Bassett Furniture

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

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

Diversification Opportunities for JBG SMITH and Bassett Furniture

-0.11

Correlation Coefficient

JBG SMITH  Bassett Furniture

Good diversification

The 3 months correlation between JBG and Bassett is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding JBG SMITH Properties and Bassett Furniture Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bassett Furniture and JBG SMITH 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 JBG SMITH Properties are associated (or correlated) with Bassett Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bassett Furniture has no effect on the direction of JBG SMITH i.e., JBG SMITH and Bassett Furniture go up and down completely randomly.

Pair Corralation between JBG SMITH and Bassett Furniture

Given the investment horizon of 90 days JBG SMITH is expected to generate 3.68 times less return on investment than Bassett Furniture. In addition to that, JBG SMITH is 1.12 times more volatile than Bassett Furniture Industries. It trades about 0.04 of its total potential returns per unit of risk. Bassett Furniture Industries is currently generating about 0.15 per unit of volatility. If you would invest  1,359  in Bassett Furniture Industries on December 25, 2024 and sell it today you would earn a total of  239.00  from holding Bassett Furniture Industries or generate 17.59% return on investment over 90 days.

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

JBG SMITH Properties  vs.  Bassett Furniture Industries

JBG SMITH Properties

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JBG SMITH Properties are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, JBG SMITH is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Bassett Furniture

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bassett Furniture Industries are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Bassett Furniture unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JBG SMITH and Bassett Furniture

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

The idea behind JBG SMITH Properties and Bassett Furniture Industries 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.