Correlation Between Tyson Foods and JBG SMITH

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

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

Diversification Opportunities for Tyson Foods and JBG SMITH

-0.59

Correlation Coefficient

Tyson Foods  JBG SMITH

Excellent diversification

The 3 months correlation between Tyson and JBG is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods 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 Tyson Foods 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 Tyson Foods 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 Tyson Foods i.e., Tyson Foods and JBG SMITH go up and down completely randomly.

Pair Corralation between Tyson Foods and JBG SMITH

Considering the 90-day investment horizon Tyson Foods is expected to under-perform the JBG SMITH. But the stock apears to be less risky and, when comparing its historical volatility, Tyson Foods is 2.1 times less risky than JBG SMITH. The stock trades about -0.29 of its potential returns per unit of risk. The JBG SMITH Properties is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,518  in JBG SMITH Properties on September 16, 2024 and sell it today you would earn a total of  113.00  from holding JBG SMITH Properties or generate 7.44% return on investment over 90 days.

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

Tyson Foods  vs.  JBG SMITH Properties

Tyson Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tyson Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Tyson Foods is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the 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 Tyson Foods and JBG SMITH

The main advantage of trading using opposite Tyson Foods and JBG SMITH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tyson Foods 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 Tyson Foods 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.