Correlation Between Agree Realty and Whitestone REIT

Can any of the company-specific risk be diversified away by investing in both Agree Realty 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 Agree Realty and Whitestone REIT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Agree Realty and Whitestone REIT, you can compare the effects of market volatilities on Agree Realty 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 Agree Realty with a short position of Whitestone REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agree Realty and Whitestone REIT.

Diversification Opportunities for Agree Realty and Whitestone REIT

-0.37

Correlation Coefficient

Agree Realty  Whitestone REIT

Very good diversification

The 3 months correlation between Agree and Whitestone is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Agree Realty and Whitestone REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitestone REIT and Agree Realty 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 Agree Realty 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 Agree Realty i.e., Agree Realty and Whitestone REIT go up and down completely randomly.

Pair Corralation between Agree Realty and Whitestone REIT

Assuming the 90 days trading horizon Agree Realty is expected to under-perform the Whitestone REIT. But the preferred stock apears to be less risky and, when comparing its historical volatility, Agree Realty is 1.55 times less risky than Whitestone REIT. The preferred stock trades about -0.37 of its potential returns per unit of risk. The Whitestone REIT is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  1,432  in Whitestone REIT on October 10, 2024 and sell it today you would lose (65.00) from holding Whitestone REIT or give up 4.54% of portfolio value over 90 days.

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

Agree Realty  vs.  Whitestone REIT

Agree Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agree Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Preferred Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Whitestone REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Whitestone REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Whitestone REIT is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Agree Realty and Whitestone REIT

The main advantage of trading using opposite Agree Realty and Whitestone REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agree Realty 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.

The idea behind Agree Realty and Whitestone REIT 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.