Correlation Between Retail Opportunity and Whitestone REIT

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

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

Diversification Opportunities for Retail Opportunity and Whitestone REIT

0.12

Correlation Coefficient

Retail Opportunity  Whitestone REIT

Average diversification

The 3 months correlation between Retail and Whitestone is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Retail Opportunity Investments and Whitestone REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitestone REIT and Retail Opportunity 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 Retail Opportunity Investments 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 Retail Opportunity i.e., Retail Opportunity and Whitestone REIT go up and down completely randomly.

Pair Corralation between Retail Opportunity and Whitestone REIT

Given the investment horizon of 90 days Retail Opportunity is expected to generate 1.6 times less return on investment than Whitestone REIT. In addition to that, Retail Opportunity is 1.14 times more volatile than Whitestone REIT. It trades about 0.03 of its total potential returns per unit of risk. Whitestone REIT is currently generating about 0.05 per unit of volatility. If you would invest  967.00  in Whitestone REIT on October 24, 2024 and sell it today you would earn a total of  369.00  from holding Whitestone REIT or generate 38.16% return on investment over 90 days.

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

Retail Opportunity Investments  vs.  Whitestone REIT

Retail Opportunity

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Retail Opportunity Investments are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward indicators, Retail Opportunity may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 Retail Opportunity and Whitestone REIT

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

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.