Correlation Between JBG SMITH and Nexpoint Residential
Can any of the company-specific risk be diversified away by investing in both JBG SMITH and Nexpoint Residential 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 Nexpoint Residential 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 Nexpoint Residential Trust, you can compare the effects of market volatilities on JBG SMITH and Nexpoint Residential 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 Nexpoint Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of JBG SMITH and Nexpoint Residential.
Diversification Opportunities for JBG SMITH and Nexpoint Residential
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between JBG and Nexpoint is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding JBG SMITH Properties and Nexpoint Residential Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexpoint Residential 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 Nexpoint Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexpoint Residential has no effect on the direction of JBG SMITH i.e., JBG SMITH and Nexpoint Residential go up and down completely randomly.
Pair Corralation between JBG SMITH and Nexpoint Residential
Given the investment horizon of 90 days JBG SMITH is expected to generate 1.43 times less return on investment than Nexpoint Residential. In addition to that, JBG SMITH is 1.12 times more volatile than Nexpoint Residential Trust. It trades about 0.11 of its total potential returns per unit of risk. Nexpoint Residential Trust is currently generating about 0.17 per unit of volatility. If you would invest 3,472 in Nexpoint Residential Trust on August 27, 2024 and sell it today you would earn a total of 1,244 from holding Nexpoint Residential Trust or generate 35.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JBG SMITH Properties vs. Nexpoint Residential Trust
Performance |
| Timeline |
| JBG SMITH Properties |
| Nexpoint Residential |
JBG SMITH and Nexpoint Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JBG SMITH and Nexpoint Residential
The main advantage of trading using opposite JBG SMITH and Nexpoint Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JBG SMITH position performs unexpectedly, Nexpoint Residential 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 Nexpoint Residential will offset losses from the drop in Nexpoint Residential's long position.| JBG SMITH vs. Cousins Properties Incorporated | JBG SMITH vs. Highwoods Properties | JBG SMITH vs. Douglas Emmett | JBG SMITH vs. Equity Commonwealth |
| Nexpoint Residential vs. Independence Realty Trust | Nexpoint Residential vs. Community Healthcare Trust | Nexpoint Residential vs. Terreno Realty | Nexpoint Residential vs. National Storage Affiliates |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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