Correlation Between JBG SMITH and Piedmont Office

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

Diversification Opportunities for JBG SMITH and Piedmont Office

-0.62

Correlation Coefficient

JBG SMITH  Piedmont Office

Excellent diversification

The 3 months correlation between JBG and Piedmont is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding JBG SMITH Properties and Piedmont Office Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piedmont Office Realty 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 Piedmont Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piedmont Office Realty has no effect on the direction of JBG SMITH i.e., JBG SMITH and Piedmont Office go up and down completely randomly.

Pair Corralation between JBG SMITH and Piedmont Office

Given the investment horizon of 90 days JBG SMITH Properties is expected to under-perform the Piedmont Office. But the stock apears to be less risky and, when comparing its historical volatility, JBG SMITH Properties is 1.26 times less risky than Piedmont Office. The stock trades about -0.1 of its potential returns per unit of risk. The Piedmont Office Realty is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  617.00  in Piedmont Office Realty on March 17, 2024 and sell it today you would earn a total of  92.00  from holding Piedmont Office Realty or generate 14.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

JBG SMITH Properties  vs.  Piedmont Office Realty

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.

Piedmont Office Realty

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Piedmont Office Realty are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Piedmont Office displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JBG SMITH and Piedmont Office

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

The idea behind JBG SMITH Properties and Piedmont Office Realty 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.