Correlation Between JBG SMITH and Diversified Healthcare
Can any of the company-specific risk be diversified away by investing in both JBG SMITH and Diversified Healthcare 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 Diversified Healthcare 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 Diversified Healthcare Trust, you can compare the effects of market volatilities on JBG SMITH and Diversified Healthcare 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 Diversified Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of JBG SMITH and Diversified Healthcare.
Diversification Opportunities for JBG SMITH and Diversified Healthcare
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JBG and Diversified is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding JBG SMITH Properties and Diversified Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified Healthcare 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 Diversified Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Healthcare has no effect on the direction of JBG SMITH i.e., JBG SMITH and Diversified Healthcare go up and down completely randomly.
Pair Corralation between JBG SMITH and Diversified Healthcare
Given the investment horizon of 90 days JBG SMITH is expected to generate 2.11 times less return on investment than Diversified Healthcare. But when comparing it to its historical volatility, JBG SMITH Properties is 2.05 times less risky than Diversified Healthcare. It trades about 0.03 of its potential returns per unit of risk. Diversified Healthcare Trust is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 228.00 in Diversified Healthcare Trust on August 28, 2024 and sell it today you would earn a total of 32.00 from holding Diversified Healthcare Trust or generate 14.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JBG SMITH Properties vs. Diversified Healthcare Trust
Performance |
| Timeline |
| JBG SMITH Properties |
| Diversified Healthcare |
JBG SMITH and Diversified Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JBG SMITH and Diversified Healthcare
The main advantage of trading using opposite JBG SMITH and Diversified Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JBG SMITH position performs unexpectedly, Diversified Healthcare 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 Diversified Healthcare will offset losses from the drop in Diversified Healthcare's long position.| JBG SMITH vs. Cousins Properties Incorporated | JBG SMITH vs. Highwoods Properties | JBG SMITH vs. Douglas Emmett | JBG SMITH vs. Equity Commonwealth |
| Diversified Healthcare vs. Global Medical REIT | Diversified Healthcare vs. Healthpeak Properties | Diversified Healthcare vs. Ventas Inc | Diversified Healthcare vs. National Health Investors |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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