Correlation Between JBG SMITH and Smith Douglas

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

Diversification Opportunities for JBG SMITH and Smith Douglas

0.47

Correlation Coefficient

JBG SMITH  Smith Douglas

Very weak diversification

The 3 months correlation between JBG and Smith is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding JBG SMITH Properties and Smith Douglas Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith Douglas Homes 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 Smith Douglas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith Douglas Homes has no effect on the direction of JBG SMITH i.e., JBG SMITH and Smith Douglas go up and down completely randomly.

Pair Corralation between JBG SMITH and Smith Douglas

Given the investment horizon of 90 days JBG SMITH Properties is expected to generate 0.73 times more return on investment than Smith Douglas. However, JBG SMITH Properties is 1.37 times less risky than Smith Douglas. It trades about 0.01 of its potential returns per unit of risk. Smith Douglas Homes is currently generating about -0.15 per unit of risk. If you would invest  1,540  in JBG SMITH Properties on December 24, 2024 and sell it today you would earn a total of  3.00  from holding JBG SMITH Properties or generate 0.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

JBG SMITH Properties  vs.  Smith Douglas Homes

JBG SMITH Properties

Risk-Adjusted Performance

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Smith Douglas Homes

Risk-Adjusted Performance

Very Weak

Over the last 90 days Smith Douglas Homes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with JBG SMITH and Smith Douglas

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

The idea behind JBG SMITH Properties and Smith Douglas Homes 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.