Correlation Between Realty Income and JBG SMITH
Can any of the company-specific risk be diversified away by investing in both Realty Income and JBG SMITH 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 Realty Income and JBG SMITH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Realty Income and JBG SMITH Properties, you can compare the effects of market volatilities on Realty Income and JBG SMITH 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 Realty Income with a short position of JBG SMITH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realty Income and JBG SMITH.
Diversification Opportunities for Realty Income and JBG SMITH
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Realty and JBG is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income and JBG SMITH Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBG SMITH Properties and Realty Income 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 Realty Income are associated (or correlated) with JBG SMITH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBG SMITH Properties has no effect on the direction of Realty Income i.e., Realty Income and JBG SMITH go up and down completely randomly.
Pair Corralation between Realty Income and JBG SMITH
Taking into account the 90-day investment horizon Realty Income is expected to generate 0.44 times more return on investment than JBG SMITH. However, Realty Income is 2.29 times less risky than JBG SMITH. It trades about -0.24 of its potential returns per unit of risk. JBG SMITH Properties is currently generating about -0.12 per unit of risk. If you would invest 6,104 in Realty Income on August 26, 2024 and sell it today you would lose (359.00) from holding Realty Income or give up 5.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Realty Income vs. JBG SMITH Properties
Performance |
| Timeline |
| Realty Income |
| JBG SMITH Properties |
Realty Income and JBG SMITH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Realty Income and JBG SMITH
The main advantage of trading using opposite Realty Income and JBG SMITH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Realty Income position performs unexpectedly, JBG SMITH 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 JBG SMITH will offset losses from the drop in JBG SMITH's long position.| Realty Income vs. Site Centers Corp | Realty Income vs. Inventrust Properties Corp | Realty Income vs. Retail Opportunity Investments | Realty Income vs. Netstreit Corp |
| JBG SMITH vs. Boston Properties | JBG SMITH vs. Alexandria Real Estate | JBG SMITH vs. Highwoods Properties | JBG SMITH vs. Piedmont Office Realty |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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