Correlation Between JBG SMITH and NETGEAR

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

Diversification Opportunities for JBG SMITH and NETGEAR

-0.72

Correlation Coefficient

JBG SMITH  NETGEAR

Pay attention - limited upside

The 3 months correlation between JBG and NETGEAR is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding JBG SMITH Properties and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR 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 NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of JBG SMITH i.e., JBG SMITH and NETGEAR go up and down completely randomly.

Pair Corralation between JBG SMITH and NETGEAR

Given the investment horizon of 90 days JBG SMITH Properties is expected to generate 0.88 times more return on investment than NETGEAR. However, JBG SMITH Properties is 1.14 times less risky than NETGEAR. It trades about 0.28 of its potential returns per unit of risk. NETGEAR is currently generating about 0.14 per unit of risk. If you would invest  1,491  in JBG SMITH Properties on September 18, 2024 and sell it today you would earn a total of  159.00  from holding JBG SMITH Properties or generate 10.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

JBG SMITH Properties  vs.  NETGEAR

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.

NETGEAR

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile technical and fundamental indicators, NETGEAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JBG SMITH and NETGEAR

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

The idea behind JBG SMITH Properties and NETGEAR 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.