Correlation Between National Health and Whitestone REIT

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

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

Diversification Opportunities for National Health and Whitestone REIT

0.42

Correlation Coefficient

National Health  Whitestone REIT

Very weak diversification

The 3 months correlation between National and Whitestone is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and Whitestone REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitestone REIT and National Health 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 National Health Investors 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 National Health i.e., National Health and Whitestone REIT go up and down completely randomly.

Pair Corralation between National Health and Whitestone REIT

Considering the 90-day investment horizon National Health Investors is expected to generate 1.14 times more return on investment than Whitestone REIT. However, National Health is 1.14 times more volatile than Whitestone REIT. It trades about 0.09 of its potential returns per unit of risk. Whitestone REIT is currently generating about 0.05 per unit of risk. If you would invest  6,816  in National Health Investors on December 21, 2024 and sell it today you would earn a total of  518.00  from holding National Health Investors or generate 7.6% return on investment over 90 days.

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

National Health Investors  vs.  Whitestone REIT

National Health Investors

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Health Investors are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical indicators, National Health may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Whitestone REIT

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Whitestone REIT are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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 National Health and Whitestone REIT

The main advantage of trading using opposite National Health and Whitestone REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health 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 National Health Investors 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.