Correlation Between Whitestone REIT and RLJ Lodging
Can any of the company-specific risk be diversified away by investing in both Whitestone REIT and RLJ Lodging 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 Whitestone REIT and RLJ Lodging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whitestone REIT and RLJ Lodging Trust, you can compare the effects of market volatilities on Whitestone REIT and RLJ Lodging 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 Whitestone REIT with a short position of RLJ Lodging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whitestone REIT and RLJ Lodging.
Diversification Opportunities for Whitestone REIT and RLJ Lodging
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Whitestone and RLJ is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Whitestone REIT and RLJ Lodging Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLJ Lodging Trust and Whitestone REIT 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 Whitestone REIT are associated (or correlated) with RLJ Lodging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RLJ Lodging Trust has no effect on the direction of Whitestone REIT i.e., Whitestone REIT and RLJ Lodging go up and down completely randomly.
Pair Corralation between Whitestone REIT and RLJ Lodging
Considering the 90-day investment horizon Whitestone REIT is expected to generate 0.74 times more return on investment than RLJ Lodging. However, Whitestone REIT is 1.36 times less risky than RLJ Lodging. It trades about 0.09 of its potential returns per unit of risk. RLJ Lodging Trust is currently generating about -0.14 per unit of risk. If you would invest 1,337 in Whitestone REIT on November 18, 2024 and sell it today you would earn a total of 20.00 from holding Whitestone REIT or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Whitestone REIT vs. RLJ Lodging Trust
Performance |
| Timeline |
| Whitestone REIT |
| RLJ Lodging Trust |
Whitestone REIT and RLJ Lodging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whitestone REIT and RLJ Lodging
The main advantage of trading using opposite Whitestone REIT and RLJ Lodging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whitestone REIT position performs unexpectedly, RLJ Lodging 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 RLJ Lodging will offset losses from the drop in RLJ Lodging's long position.| Whitestone REIT vs. Regency Centers | Whitestone REIT vs. Saul Centers | Whitestone REIT vs. Retail Opportunity Investments | Whitestone REIT vs. Rithm Property Trust |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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