Correlation Between JBG SMITH and Veris Residential

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

Diversification Opportunities for JBG SMITH and Veris Residential

-0.4

Correlation Coefficient

JBG SMITH  Veris Residential

Very good diversification

The 3 months correlation between JBG and Veris is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding JBG SMITH Properties and Veris Residential in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veris Residential 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 Veris Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veris Residential has no effect on the direction of JBG SMITH i.e., JBG SMITH and Veris Residential go up and down completely randomly.

Pair Corralation between JBG SMITH and Veris Residential

Given the investment horizon of 90 days JBG SMITH Properties is expected to under-perform the Veris Residential. In addition to that, JBG SMITH is 1.36 times more volatile than Veris Residential. It trades about -0.01 of its total potential returns per unit of risk. Veris Residential is currently generating about 0.07 per unit of volatility. If you would invest  1,727  in Veris Residential on September 3, 2024 and sell it today you would earn a total of  98.00  from holding Veris Residential or generate 5.67% 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.  Veris Residential

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.

Veris Residential

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Veris Residential are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Veris Residential is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with JBG SMITH and Veris Residential

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

The idea behind JBG SMITH Properties and Veris Residential 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.