Correlation Between Broadstone Net and Whitestone REIT

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

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

Diversification Opportunities for Broadstone Net and Whitestone REIT

-0.29

Correlation Coefficient

Broadstone Net  Whitestone REIT

Very good diversification

The 3 months correlation between Broadstone and Whitestone is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Broadstone Net Lease and Whitestone REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitestone REIT and Broadstone Net 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 Broadstone Net Lease 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 Broadstone Net i.e., Broadstone Net and Whitestone REIT go up and down completely randomly.

Pair Corralation between Broadstone Net and Whitestone REIT

Considering the 90-day investment horizon Broadstone Net Lease is expected to under-perform the Whitestone REIT. But the stock apears to be less risky and, when comparing its historical volatility, Broadstone Net Lease is 1.3 times less risky than Whitestone REIT. The stock trades about -0.2 of its potential returns per unit of risk. The Whitestone REIT is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,391  in Whitestone REIT on October 10, 2024 and sell it today you would lose (24.00) from holding Whitestone REIT or give up 1.73% of portfolio value over 90 days.

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

Broadstone Net Lease  vs.  Whitestone REIT

Broadstone Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadstone Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional 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 Broadstone Net and Whitestone REIT

The main advantage of trading using opposite Broadstone Net and Whitestone REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadstone Net 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 Broadstone Net Lease 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.