Correlation Between Hersha Hospitality and Whitestone REIT

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

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

Diversification Opportunities for Hersha Hospitality and Whitestone REIT

-0.29

Correlation Coefficient

Hersha Hospitality  Whitestone REIT

Very good diversification

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

Pair Corralation between Hersha Hospitality and Whitestone REIT

Allowing for the 90-day total investment horizon Hersha Hospitality Trust is expected to under-perform the Whitestone REIT. In addition to that, Hersha Hospitality is 1.38 times more volatile than Whitestone REIT. It trades about -0.11 of its total potential returns per unit of risk. Whitestone REIT is currently generating about 0.06 per unit of volatility. If you would invest  937.00  in Whitestone REIT on October 8, 2024 and sell it today you would earn a total of  483.00  from holding Whitestone REIT or generate 51.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	26.41%
Values	Daily Returns

Hersha Hospitality Trust  vs.  Whitestone REIT

Hersha Hospitality Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hersha Hospitality Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hersha Hospitality is not utilizing all of its potentials. The new stock price uproar, may contribute to short-horizon losses for the private investors.

Whitestone REIT

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Whitestone REIT are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Whitestone REIT may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hersha Hospitality and Whitestone REIT

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