Correlation Between JBG SMITH and Sphere Entertainment

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

Diversification Opportunities for JBG SMITH and Sphere Entertainment

0.71

Correlation Coefficient

JBG SMITH  Sphere Entertainment

Poor diversification

The 3 months correlation between JBG and Sphere is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding JBG SMITH Properties and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment 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 Sphere Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sphere Entertainment has no effect on the direction of JBG SMITH i.e., JBG SMITH and Sphere Entertainment go up and down completely randomly.

Pair Corralation between JBG SMITH and Sphere Entertainment

Given the investment horizon of 90 days JBG SMITH Properties is expected to generate 0.63 times more return on investment than Sphere Entertainment. However, JBG SMITH Properties is 1.6 times less risky than Sphere Entertainment. It trades about -0.05 of its potential returns per unit of risk. Sphere Entertainment Co is currently generating about -0.06 per unit of risk. If you would invest  1,588  in JBG SMITH Properties on February 20, 2024 and sell it today you would lose (108.00) from holding JBG SMITH Properties or give up 6.8% of portfolio value over 90 days.

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

JBG SMITH Properties  vs.  Sphere Entertainment Co

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 comparatively stable technical and fundamental indicators, JBG SMITH is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Sphere Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sphere Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's technical indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with JBG SMITH and Sphere Entertainment

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

The idea behind JBG SMITH Properties and Sphere Entertainment Co 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.