Correlation Between JBG SMITH and Phillips Edison

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

Diversification Opportunities for JBG SMITH and Phillips Edison

-0.48

Correlation Coefficient

JBG SMITH  Phillips Edison

Very good diversification

The 3 months correlation between JBG and Phillips is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding JBG SMITH Properties and Phillips Edison Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips Edison 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 Phillips Edison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phillips Edison has no effect on the direction of JBG SMITH i.e., JBG SMITH and Phillips Edison go up and down completely randomly.

Pair Corralation between JBG SMITH and Phillips Edison

Given the investment horizon of 90 days JBG SMITH is expected to generate 11.49 times less return on investment than Phillips Edison. In addition to that, JBG SMITH is 1.82 times more volatile than Phillips Edison Co. It trades about 0.01 of its total potential returns per unit of risk. Phillips Edison Co is currently generating about 0.13 per unit of volatility. If you would invest  3,651  in Phillips Edison Co on September 2, 2024 and sell it today you would earn a total of  299.00  from holding Phillips Edison Co or generate 8.19% return on investment over 90 days.

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

JBG SMITH Properties  vs.  Phillips Edison 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Phillips Edison

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Phillips Edison Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Phillips Edison may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with JBG SMITH and Phillips Edison

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

The idea behind JBG SMITH Properties and Phillips Edison 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.