Correlation Between JBG SMITH and SUMITOMO

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

Diversification Opportunities for JBG SMITH and SUMITOMO

0.56

Correlation Coefficient

JBG SMITH  SUMITOMO

Very weak diversification

The 3 months correlation between JBG and SUMITOMO is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding JBG SMITH Properties and SUMITOMO MITSUI FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUMITOMO MITSUI FINANCIAL 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 SUMITOMO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUMITOMO MITSUI FINANCIAL has no effect on the direction of JBG SMITH i.e., JBG SMITH and SUMITOMO go up and down completely randomly.

Pair Corralation between JBG SMITH and SUMITOMO

Given the investment horizon of 90 days JBG SMITH Properties is expected to under-perform the SUMITOMO. In addition to that, JBG SMITH is 2.94 times more volatile than SUMITOMO MITSUI FINANCIAL. It trades about -0.1 of its total potential returns per unit of risk. SUMITOMO MITSUI FINANCIAL is currently generating about -0.18 per unit of volatility. If you would invest  9,458  in SUMITOMO MITSUI FINANCIAL on September 14, 2024 and sell it today you would lose (570.00) from holding SUMITOMO MITSUI FINANCIAL or give up 6.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.48%
Values	Daily Returns

JBG SMITH Properties  vs.  SUMITOMO MITSUI FINANCIAL

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.

SUMITOMO MITSUI FINANCIAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SUMITOMO MITSUI FINANCIAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for SUMITOMO MITSUI FINANCIAL investors.

Pair Trading with JBG SMITH and SUMITOMO

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

The idea behind JBG SMITH Properties and SUMITOMO MITSUI FINANCIAL 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.