Correlation Between Brandywine Realty and JBG SMITH

Can any of the company-specific risk be diversified away by investing in both Brandywine Realty 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 Brandywine Realty and JBG SMITH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brandywine Realty Trust and JBG SMITH Properties, you can compare the effects of market volatilities on Brandywine Realty 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 Brandywine Realty with a short position of JBG SMITH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brandywine Realty and JBG SMITH.

Diversification Opportunities for Brandywine Realty and JBG SMITH

0.23

Correlation Coefficient

Brandywine Realty  JBG SMITH

Modest diversification

The 3 months correlation between Brandywine and JBG is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Brandywine Realty Trust 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 Brandywine Realty 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 Brandywine Realty Trust 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 Brandywine Realty i.e., Brandywine Realty and JBG SMITH go up and down completely randomly.

Pair Corralation between Brandywine Realty and JBG SMITH

Considering the 90-day investment horizon Brandywine Realty Trust is expected to generate 1.52 times more return on investment than JBG SMITH. However, Brandywine Realty is 1.52 times more volatile than JBG SMITH Properties. It trades about 0.08 of its potential returns per unit of risk. JBG SMITH Properties is currently generating about -0.05 per unit of risk. If you would invest  502.00  in Brandywine Realty Trust on September 12, 2024 and sell it today you would earn a total of  57.00  from holding Brandywine Realty Trust or generate 11.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Brandywine Realty Trust  vs.  JBG SMITH Properties

Brandywine Realty Trust

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brandywine Realty Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Brandywine Realty displayed solid returns over the last few months and may actually be approaching a breakup point.

JBG SMITH Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JBG SMITH Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, JBG SMITH is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Brandywine Realty and JBG SMITH

The main advantage of trading using opposite Brandywine Realty and JBG SMITH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brandywine Realty 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.

The idea behind Brandywine Realty Trust and JBG SMITH Properties pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.