Correlation Between JBG SMITH and Toro

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

Diversification Opportunities for JBG SMITH and Toro

0.57

Correlation Coefficient

JBG SMITH  Toro

Very weak diversification

The 3 months correlation between JBG and Toro is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding JBG SMITH Properties and Toro Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toro 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 Toro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toro has no effect on the direction of JBG SMITH i.e., JBG SMITH and Toro go up and down completely randomly.

Pair Corralation between JBG SMITH and Toro

Given the investment horizon of 90 days JBG SMITH Properties is expected to under-perform the Toro. In addition to that, JBG SMITH is 2.15 times more volatile than Toro Co. It trades about -0.12 of its total potential returns per unit of risk. Toro Co is currently generating about 0.02 per unit of volatility. If you would invest  8,683  in Toro Co on February 2, 2024 and sell it today you would earn a total of  28.00  from holding Toro Co or generate 0.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

JBG SMITH Properties  vs.  Toro 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 latest unfluctuating 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.

Toro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Toro Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with JBG SMITH and Toro

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

The idea behind JBG SMITH Properties and Toro 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.