Correlation Between JBG SMITH and Oatly Group

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

Diversification Opportunities for JBG SMITH and Oatly Group

0.48

Correlation Coefficient

JBG SMITH  Oatly Group

Very weak diversification

The 3 months correlation between JBG and Oatly is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding JBG SMITH Properties and Oatly Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oatly Group AB 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 Oatly Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oatly Group AB has no effect on the direction of JBG SMITH i.e., JBG SMITH and Oatly Group go up and down completely randomly.

Pair Corralation between JBG SMITH and Oatly Group

Given the investment horizon of 90 days JBG SMITH Properties is expected to generate 0.34 times more return on investment than Oatly Group. However, JBG SMITH Properties is 2.93 times less risky than Oatly Group. It trades about -0.11 of its potential returns per unit of risk. Oatly Group AB is currently generating about -0.13 per unit of risk. If you would invest  1,693  in JBG SMITH Properties on August 20, 2024 and sell it today you would lose (175.00) from holding JBG SMITH Properties or give up 10.34% of portfolio value over 90 days.

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

JBG SMITH Properties  vs.  Oatly Group AB

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.

Oatly Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oatly Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with JBG SMITH and Oatly Group

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

The idea behind JBG SMITH Properties and Oatly Group AB 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.