Correlation Between Steven Madden and JBG SMITH

Can any of the company-specific risk be diversified away by investing in both Steven Madden and JBG SMITH 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 Steven Madden and JBG SMITH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Steven Madden and JBG SMITH Properties, you can compare the effects of market volatilities on Steven Madden and JBG SMITH 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 Steven Madden with a short position of JBG SMITH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steven Madden and JBG SMITH.

Diversification Opportunities for Steven Madden and JBG SMITH

0.78

Correlation Coefficient

Steven Madden  JBG SMITH

Poor diversification

The 3 months correlation between Steven and JBG is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Steven Madden and JBG SMITH Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBG SMITH Properties and Steven Madden 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 Steven Madden are associated (or correlated) with JBG SMITH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBG SMITH Properties has no effect on the direction of Steven Madden i.e., Steven Madden and JBG SMITH go up and down completely randomly.

Pair Corralation between Steven Madden and JBG SMITH

Given the investment horizon of 90 days Steven Madden is expected to under-perform the JBG SMITH. But the stock apears to be less risky and, when comparing its historical volatility, Steven Madden is 1.19 times less risky than JBG SMITH. The stock trades about -0.12 of its potential returns per unit of risk. The JBG SMITH Properties is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  1,730  in JBG SMITH Properties on September 28, 2024 and sell it today you would lose (177.00) from holding JBG SMITH Properties or give up 10.23% of portfolio value over 90 days.

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

Steven Madden  vs.  JBG SMITH Properties

Steven Madden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Steven Madden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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.

Pair Trading with Steven Madden and JBG SMITH

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

The idea behind Steven Madden and JBG SMITH Properties 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.