Correlation Between Quanex Building and JBG SMITH

Can any of the company-specific risk be diversified away by investing in both Quanex Building and JBG SMITH 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 Quanex Building and JBG SMITH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Quanex Building Products and JBG SMITH Properties, you can compare the effects of market volatilities on Quanex Building and JBG SMITH 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 Quanex Building with a short position of JBG SMITH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanex Building and JBG SMITH.

Diversification Opportunities for Quanex Building and JBG SMITH

0.63

Correlation Coefficient

Quanex Building  JBG SMITH

Poor diversification

The 3 months correlation between Quanex and JBG is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Quanex Building Products and JBG SMITH Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBG SMITH Properties and Quanex Building 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 Quanex Building Products are associated (or correlated) with JBG SMITH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBG SMITH Properties has no effect on the direction of Quanex Building i.e., Quanex Building and JBG SMITH go up and down completely randomly.

Pair Corralation between Quanex Building and JBG SMITH

Allowing for the 90-day total investment horizon Quanex Building is expected to generate 2.73 times less return on investment than JBG SMITH. In addition to that, Quanex Building is 1.41 times more volatile than JBG SMITH Properties. It trades about 0.07 of its total potential returns per unit of risk. JBG SMITH Properties is currently generating about 0.28 per unit of volatility. If you would invest  1,467  in JBG SMITH Properties on May 3, 2025 and sell it today you would earn a total of  651.00  from holding JBG SMITH Properties or generate 44.38% return on investment over 90 days.

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

Quanex Building Products  vs.  JBG SMITH Properties

Quanex Building Products

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Quanex Building Products are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Quanex Building showed solid returns over the last few months and may actually be approaching a breakup point.

JBG SMITH Properties

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JBG SMITH Properties are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, JBG SMITH unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quanex Building and JBG SMITH

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

The idea behind Quanex Building Products and JBG SMITH Properties 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.