Correlation Between JBG SMITH and AMERICAN

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

Diversification Opportunities for JBG SMITH and AMERICAN

0.25

Correlation Coefficient

JBG SMITH  AMERICAN

Modest diversification

The 3 months correlation between JBG and AMERICAN is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding JBG SMITH Properties and AMERICAN TOWER P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERICAN TOWER P 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 AMERICAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERICAN TOWER P has no effect on the direction of JBG SMITH i.e., JBG SMITH and AMERICAN go up and down completely randomly.

Pair Corralation between JBG SMITH and AMERICAN

Given the investment horizon of 90 days JBG SMITH Properties is expected to under-perform the AMERICAN. In addition to that, JBG SMITH is 8.69 times more volatile than AMERICAN TOWER P. It trades about -0.11 of its total potential returns per unit of risk. AMERICAN TOWER P is currently generating about 0.01 per unit of volatility. If you would invest  9,669  in AMERICAN TOWER P on October 26, 2024 and sell it today you would earn a total of  12.00  from holding AMERICAN TOWER P or generate 0.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.67%
Values	Daily Returns

JBG SMITH Properties  vs.  AMERICAN TOWER P

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.

AMERICAN TOWER P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMERICAN TOWER P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AMERICAN is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JBG SMITH and AMERICAN

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

The idea behind JBG SMITH Properties and AMERICAN TOWER P 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 CEOs Directory module to screen CEOs from public companies around the world.