Correlation Between JBG SMITH and United Utilities

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

Diversification Opportunities for JBG SMITH and United Utilities

-0.48

Correlation Coefficient

JBG SMITH  United Utilities

Very good diversification

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

Pair Corralation between JBG SMITH and United Utilities

Given the investment horizon of 90 days JBG SMITH Properties is expected to generate 1.38 times more return on investment than United Utilities. However, JBG SMITH is 1.38 times more volatile than United Utilities Group. It trades about 0.05 of its potential returns per unit of risk. United Utilities Group is currently generating about 0.01 per unit of risk. If you would invest  1,461  in JBG SMITH Properties on September 13, 2024 and sell it today you would earn a total of  164.00  from holding JBG SMITH Properties or generate 11.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.32%
Values	Daily Returns

JBG SMITH Properties  vs.  United Utilities Group

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.

United Utilities

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in United Utilities Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, United Utilities may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with JBG SMITH and United Utilities

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

The idea behind JBG SMITH Properties and United Utilities Group 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.