Correlation Between JBG SMITH and LGI Homes
Can any of the company-specific risk be diversified away by investing in both JBG SMITH and LGI Homes 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 LGI Homes 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 LGI Homes, you can compare the effects of market volatilities on JBG SMITH and LGI Homes 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 LGI Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of JBG SMITH and LGI Homes.
Diversification Opportunities for JBG SMITH and LGI Homes
Very weak diversification
The 3 months correlation between JBG and LGI is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding JBG SMITH Properties and LGI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGI Homes 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 LGI Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LGI Homes has no effect on the direction of JBG SMITH i.e., JBG SMITH and LGI Homes go up and down completely randomly.
Pair Corralation between JBG SMITH and LGI Homes
Given the investment horizon of 90 days JBG SMITH Properties is expected to under-perform the LGI Homes. In addition to that, JBG SMITH is 1.04 times more volatile than LGI Homes. It trades about -0.13 of its total potential returns per unit of risk. LGI Homes is currently generating about 0.13 per unit of volatility. If you would invest 10,461 in LGI Homes on August 28, 2024 and sell it today you would earn a total of 661.00 from holding LGI Homes or generate 6.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JBG SMITH Properties vs. LGI Homes
Performance |
| Timeline |
| JBG SMITH Properties |
| LGI Homes |
JBG SMITH and LGI Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JBG SMITH and LGI Homes
The main advantage of trading using opposite JBG SMITH and LGI Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JBG SMITH position performs unexpectedly, LGI Homes 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 LGI Homes will offset losses from the drop in LGI Homes' long position.| JBG SMITH vs. Cousins Properties Incorporated | JBG SMITH vs. Highwoods Properties | JBG SMITH vs. Douglas Emmett | JBG SMITH vs. Equity Commonwealth |
| LGI Homes vs. Arhaus Inc | LGI Homes vs. Floor Decor Holdings | LGI Homes vs. Kingfisher plc | LGI Homes vs. Haverty Furniture Companies |
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 Stocks Directory module to find actively traded stocks across global markets.
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