Correlation Between JBG SMITH and Office Properties
Can any of the company-specific risk be diversified away by investing in both JBG SMITH and Office Properties 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 Office Properties 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 Office Properties Income, you can compare the effects of market volatilities on JBG SMITH and Office Properties 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 Office Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of JBG SMITH and Office Properties.
Diversification Opportunities for JBG SMITH and Office Properties
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JBG and Office is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding JBG SMITH Properties and Office Properties Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Office Properties Income 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 Office Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Office Properties Income has no effect on the direction of JBG SMITH i.e., JBG SMITH and Office Properties go up and down completely randomly.
Pair Corralation between JBG SMITH and Office Properties
Given the investment horizon of 90 days JBG SMITH Properties is expected to generate 0.49 times more return on investment than Office Properties. However, JBG SMITH Properties is 2.03 times less risky than Office Properties. It trades about -0.14 of its potential returns per unit of risk. Office Properties Income is currently generating about -0.42 per unit of risk. If you would invest 1,798 in JBG SMITH Properties on August 27, 2024 and sell it today you would lose (141.00) from holding JBG SMITH Properties or give up 7.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JBG SMITH Properties vs. Office Properties Income
Performance |
| Timeline |
| JBG SMITH Properties |
| Office Properties Income |
JBG SMITH and Office Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JBG SMITH and Office Properties
The main advantage of trading using opposite JBG SMITH and Office Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JBG SMITH position performs unexpectedly, Office Properties 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 Office Properties will offset losses from the drop in Office Properties' long position.| JBG SMITH vs. Cousins Properties Incorporated | JBG SMITH vs. Highwoods Properties | JBG SMITH vs. Douglas Emmett | JBG SMITH vs. Equity Commonwealth |
| Office Properties vs. Hudson Pacific Properties | Office Properties vs. Piedmont Office Realty | Office Properties vs. City Office | Office Properties vs. Kilroy Realty Corp |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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