Correlation Between JBG SMITH and Eastern

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

Diversification Opportunities for JBG SMITH and Eastern

0.8

Correlation Coefficient

JBG SMITH  Eastern

Very poor diversification

The 3 months correlation between JBG and Eastern is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding JBG SMITH Properties and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern 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 Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of JBG SMITH i.e., JBG SMITH and Eastern go up and down completely randomly.

Pair Corralation between JBG SMITH and Eastern

Given the investment horizon of 90 days JBG SMITH Properties is expected to under-perform the Eastern. But the stock apears to be less risky and, when comparing its historical volatility, JBG SMITH Properties is 1.3 times less risky than Eastern. The stock trades about -0.02 of its potential returns per unit of risk. The Eastern Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,990  in Eastern Co on September 4, 2024 and sell it today you would lose (17.00) from holding Eastern Co or give up 0.57% of portfolio value over 90 days.

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

JBG SMITH Properties  vs.  Eastern Co

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.

Eastern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Eastern is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with JBG SMITH and Eastern

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

The idea behind JBG SMITH Properties and Eastern Co 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.