Correlation Between United Utilities and JBG SMITH
Can any of the company-specific risk be diversified away by investing in both United Utilities 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 United Utilities and JBG SMITH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Utilities Group and JBG SMITH Properties, you can compare the effects of market volatilities on United Utilities 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 United Utilities with a short position of JBG SMITH. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and JBG SMITH.
Diversification Opportunities for United Utilities and JBG SMITH
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and JBG is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group 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 United Utilities 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 United Utilities Group 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 United Utilities i.e., United Utilities and JBG SMITH go up and down completely randomly.
Pair Corralation between United Utilities and JBG SMITH
Assuming the 90 days horizon United Utilities Group is expected to generate 0.92 times more return on investment than JBG SMITH. However, United Utilities Group is 1.09 times less risky than JBG SMITH. It trades about 0.09 of its potential returns per unit of risk. JBG SMITH Properties is currently generating about -0.1 per unit of risk. If you would invest 1,286 in United Utilities Group on September 14, 2024 and sell it today you would earn a total of 108.00 from holding United Utilities Group or generate 8.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
United Utilities Group vs. JBG SMITH Properties
Performance |
Timeline |
United Utilities |
JBG SMITH Properties |
United Utilities and JBG SMITH Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Utilities and JBG SMITH
The main advantage of trading using opposite United Utilities and JBG SMITH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities 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.United Utilities vs. Artesian Resources | United Utilities vs. Global Water Resources | United Utilities vs. Essential Utilities | United Utilities vs. American Water Works |
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Check out your portfolio center.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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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