Correlation Between JBG SMITH and Black Hills

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

Diversification Opportunities for JBG SMITH and Black Hills

-0.6

Correlation Coefficient

JBG SMITH  Black Hills

Excellent diversification

The 3 months correlation between JBG and Black is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding JBG SMITH Properties and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills 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 Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of JBG SMITH i.e., JBG SMITH and Black Hills go up and down completely randomly.

Pair Corralation between JBG SMITH and Black Hills

Given the investment horizon of 90 days JBG SMITH Properties is expected to under-perform the Black Hills. In addition to that, JBG SMITH is 1.43 times more volatile than Black Hills. It trades about -0.15 of its total potential returns per unit of risk. Black Hills is currently generating about 0.03 per unit of volatility. If you would invest  5,276  in Black Hills on March 12, 2024 and sell it today you would earn a total of  85.00  from holding Black Hills or generate 1.61% return on investment over 90 days.

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

JBG SMITH Properties  vs.  Black Hills

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 unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Black Hills

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Black Hills are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking signals, Black Hills is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with JBG SMITH and Black Hills

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

The idea behind JBG SMITH Properties and Black Hills 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.