Correlation Between Whitestone REIT and Hersha Hospitality

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

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

Diversification Opportunities for Whitestone REIT and Hersha Hospitality

-0.29

Correlation Coefficient

Whitestone REIT  Hersha Hospitality

Very good diversification

The 3 months correlation between Whitestone and Hersha is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Whitestone REIT and Hersha Hospitality Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hersha Hospitality Trust and Whitestone REIT 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 Whitestone REIT are associated (or correlated) with Hersha Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hersha Hospitality Trust has no effect on the direction of Whitestone REIT i.e., Whitestone REIT and Hersha Hospitality go up and down completely randomly.

Pair Corralation between Whitestone REIT and Hersha Hospitality

If you would invest  1,335  in Whitestone REIT on October 8, 2024 and sell it today you would earn a total of  85.00  from holding Whitestone REIT or generate 6.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.61%
Values	Daily Returns

Whitestone REIT  vs.  Hersha Hospitality Trust

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.

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.

Pair Trading with Whitestone REIT and Hersha Hospitality

The main advantage of trading using opposite Whitestone REIT and Hersha Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whitestone REIT position performs unexpectedly, Hersha Hospitality 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 Hersha Hospitality will offset losses from the drop in Hersha Hospitality's long position.

The idea behind Whitestone REIT and Hersha Hospitality Trust 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.