Correlation Between JBG SMITH and SMS Co,

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

Diversification Opportunities for JBG SMITH and SMS Co,

0.72

Correlation Coefficient

JBG SMITH  SMS Co,

Poor diversification

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

Pair Corralation between JBG SMITH and SMS Co,

Given the investment horizon of 90 days JBG SMITH Properties is expected to generate 0.73 times more return on investment than SMS Co,. However, JBG SMITH Properties is 1.37 times less risky than SMS Co,. It trades about -0.16 of its potential returns per unit of risk. SMS Co, is currently generating about -0.16 per unit of risk. If you would invest  1,768  in JBG SMITH Properties on October 15, 2024 and sell it today you would lose (342.00) from holding JBG SMITH Properties or give up 19.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.31%
Values	Daily Returns

JBG SMITH Properties  vs.  SMS Co,

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

SMS Co,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SMS Co, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with JBG SMITH and SMS Co,

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

The idea behind JBG SMITH Properties and SMS Co, 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.