Correlation Between JBG SMITH and PHLX Oil

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

Diversification Opportunities for JBG SMITH and PHLX Oil

0.77

Correlation Coefficient

JBG SMITH  PHLX Oil

Poor diversification

The 3 months correlation between JBG and PHLX is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding JBG SMITH Properties and PHLX Oil Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHLX Oil Service 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 PHLX Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHLX Oil Service has no effect on the direction of JBG SMITH i.e., JBG SMITH and PHLX Oil go up and down completely randomly.

Pair Corralation between JBG SMITH and PHLX Oil

Given the investment horizon of 90 days JBG SMITH Properties is expected to generate 1.14 times more return on investment than PHLX Oil. However, JBG SMITH is 1.14 times more volatile than PHLX Oil Service. It trades about 0.27 of its potential returns per unit of risk. PHLX Oil Service is currently generating about 0.08 per unit of risk. If you would invest  1,497  in JBG SMITH Properties on May 2, 2025 and sell it today you would earn a total of  651.00  from holding JBG SMITH Properties or generate 43.49% return on investment over 90 days.

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

JBG SMITH Properties  vs.  PHLX Oil Service

Pair Trading with JBG SMITH and PHLX Oil

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

The idea behind JBG SMITH Properties and PHLX Oil Service 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.