Correlation Between JBG SMITH and Sapiens International

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

Diversification Opportunities for JBG SMITH and Sapiens International

0.81

Correlation Coefficient

JBG SMITH  Sapiens International

Very poor diversification

The 3 months correlation between JBG and Sapiens is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding JBG SMITH Properties and Sapiens International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapiens International 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 Sapiens International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapiens International has no effect on the direction of JBG SMITH i.e., JBG SMITH and Sapiens International go up and down completely randomly.

Pair Corralation between JBG SMITH and Sapiens International

Given the investment horizon of 90 days JBG SMITH Properties is expected to generate 0.61 times more return on investment than Sapiens International. However, JBG SMITH Properties is 1.63 times less risky than Sapiens International. It trades about 0.01 of its potential returns per unit of risk. Sapiens International is currently generating about -0.05 per unit of risk. If you would invest  1,510  in JBG SMITH Properties on September 30, 2024 and sell it today you would earn a total of  13.00  from holding JBG SMITH Properties or generate 0.86% return on investment over 90 days.

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

JBG SMITH Properties  vs.  Sapiens International

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.

Sapiens International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sapiens International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with JBG SMITH and Sapiens International

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

The idea behind JBG SMITH Properties and Sapiens International 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.