Correlation Between JBG SMITH and Compania Cervecerias

Can any of the company-specific risk be diversified away by investing in both JBG SMITH and Compania Cervecerias 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 Compania Cervecerias 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 Compania Cervecerias Unidas, you can compare the effects of market volatilities on JBG SMITH and Compania Cervecerias 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 Compania Cervecerias. Check out your portfolio center. Please also check ongoing floating volatility patterns of JBG SMITH and Compania Cervecerias.

Diversification Opportunities for JBG SMITH and Compania Cervecerias

0.09

Correlation Coefficient

JBG SMITH  Compania Cervecerias

Significant diversification

The 3 months correlation between JBG and Compania is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding JBG SMITH Properties and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias 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 Compania Cervecerias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania Cervecerias has no effect on the direction of JBG SMITH i.e., JBG SMITH and Compania Cervecerias go up and down completely randomly.

Pair Corralation between JBG SMITH and Compania Cervecerias

Given the investment horizon of 90 days JBG SMITH Properties is expected to under-perform the Compania Cervecerias. In addition to that, JBG SMITH is 1.36 times more volatile than Compania Cervecerias Unidas. It trades about -0.1 of its total potential returns per unit of risk. Compania Cervecerias Unidas is currently generating about -0.01 per unit of volatility. If you would invest  1,165  in Compania Cervecerias Unidas on October 1, 2024 and sell it today you would lose (15.00) from holding Compania Cervecerias Unidas or give up 1.29% of portfolio value over 90 days.

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

JBG SMITH Properties  vs.  Compania Cervecerias Unidas

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 latest weak performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Compania Cervecerias

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with JBG SMITH and Compania Cervecerias

The main advantage of trading using opposite JBG SMITH and Compania Cervecerias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JBG SMITH position performs unexpectedly, Compania Cervecerias 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 Compania Cervecerias will offset losses from the drop in Compania Cervecerias' long position.

The idea behind JBG SMITH Properties and Compania Cervecerias Unidas 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.