Correlation Between RLJ Lodging and Whitestone REIT
Can any of the company-specific risk be diversified away by investing in both RLJ Lodging and Whitestone REIT 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 RLJ Lodging and Whitestone REIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RLJ Lodging Trust and Whitestone REIT, you can compare the effects of market volatilities on RLJ Lodging and Whitestone REIT 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 RLJ Lodging with a short position of Whitestone REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLJ Lodging and Whitestone REIT.
Diversification Opportunities for RLJ Lodging and Whitestone REIT
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RLJ and Whitestone is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding RLJ Lodging Trust and Whitestone REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitestone REIT and RLJ Lodging 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 RLJ Lodging Trust are associated (or correlated) with Whitestone REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitestone REIT has no effect on the direction of RLJ Lodging i.e., RLJ Lodging and Whitestone REIT go up and down completely randomly.
Pair Corralation between RLJ Lodging and Whitestone REIT
Considering the 90-day investment horizon RLJ Lodging Trust is expected to generate 1.42 times more return on investment than Whitestone REIT. However, RLJ Lodging is 1.42 times more volatile than Whitestone REIT. It trades about 0.3 of its potential returns per unit of risk. Whitestone REIT is currently generating about 0.17 per unit of risk. If you would invest 907.00 in RLJ Lodging Trust on August 28, 2024 and sell it today you would earn a total of 101.00 from holding RLJ Lodging Trust or generate 11.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RLJ Lodging Trust vs. Whitestone REIT
Performance |
| Timeline |
| RLJ Lodging Trust |
| Whitestone REIT |
RLJ Lodging and Whitestone REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLJ Lodging and Whitestone REIT
The main advantage of trading using opposite RLJ Lodging and Whitestone REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLJ Lodging position performs unexpectedly, Whitestone REIT 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 Whitestone REIT will offset losses from the drop in Whitestone REIT's long position.| RLJ Lodging vs. Sunstone Hotel Investors | RLJ Lodging vs. Pebblebrook Hotel Trust | RLJ Lodging vs. Summit Hotel Properties | RLJ Lodging vs. Ryman Hospitality Properties |
| Whitestone REIT vs. Regency Centers | Whitestone REIT vs. Saul Centers | Whitestone REIT vs. Retail Opportunity Investments | Whitestone REIT vs. Site Centers Corp |
Check out your portfolio center.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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