Can any of the company-specific risk be diversified away by investing in both JBG SMITH and 24SevenOffice Group 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 24SevenOffice Group 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 24SevenOffice Group AB, you can compare the effects of market volatilities on JBG SMITH and 24SevenOffice Group 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 24SevenOffice Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of JBG SMITH and 24SevenOffice Group.
Diversification Opportunities for JBG SMITH and 24SevenOffice Group
The 3 months correlation between JBG and 24SevenOffice is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding JBG SMITH Properties and 24SevenOffice Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 24SevenOffice Group 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 24SevenOffice Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 24SevenOffice Group has no effect on the direction of JBG SMITH i.e., JBG SMITH and 24SevenOffice Group go up and down completely randomly.
Pair Corralation between JBG SMITH and 24SevenOffice Group
Given the investment horizon of 90 days JBG SMITH Properties is expected to under-perform the 24SevenOffice Group. But the stock apears to be less risky and, when comparing its historical volatility, JBG SMITH Properties is 3.69 times less risky than 24SevenOffice Group. The stock trades about -0.08 of its potential returns per unit of risk. The 24SevenOffice Group AB is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 110.00 in 24SevenOffice Group AB on March 6, 2024 and sell it today you would earn a total of 83.00 from holding 24SevenOffice Group AB or generate 75.45% return on investment over 90 days.
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 inconsistent 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.
Compared to the overall equity markets, risk-adjusted returns on investments in 24SevenOffice Group AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, 24SevenOffice Group reported solid returns over the last few months and may actually be approaching a breakup point.