Correlation Between JBG SMITH and Ladder

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

Diversification Opportunities for JBG SMITH and Ladder

0.27

Correlation Coefficient

JBG SMITH  Ladder

Modest diversification

The 3 months correlation between JBG and Ladder is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding JBG SMITH Properties and Ladder Capital Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladder Capital Finance 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 Ladder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladder Capital Finance has no effect on the direction of JBG SMITH i.e., JBG SMITH and Ladder go up and down completely randomly.

Pair Corralation between JBG SMITH and Ladder

Given the investment horizon of 90 days JBG SMITH Properties is expected to generate 2.52 times more return on investment than Ladder. However, JBG SMITH is 2.52 times more volatile than Ladder Capital Finance. It trades about 0.01 of its potential returns per unit of risk. Ladder Capital Finance is currently generating about 0.01 per unit of risk. If you would invest  1,647  in JBG SMITH Properties on September 14, 2024 and sell it today you would lose (16.00) from holding JBG SMITH Properties or give up 0.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.76%
Values	Daily Returns

JBG SMITH Properties  vs.  Ladder Capital Finance

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.

Ladder Capital Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ladder Capital Finance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Ladder is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JBG SMITH and Ladder

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

The idea behind JBG SMITH Properties and Ladder Capital Finance 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.