Correlation Between Whitestone REIT and National Retail

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

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

Diversification Opportunities for Whitestone REIT and National Retail

0.57

Correlation Coefficient

Whitestone REIT  National Retail

Very weak diversification

The 3 months correlation between Whitestone and National is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Whitestone REIT and National Retail Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Retail Prop 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 National Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Retail Prop has no effect on the direction of Whitestone REIT i.e., Whitestone REIT and National Retail go up and down completely randomly.

Pair Corralation between Whitestone REIT and National Retail

Considering the 90-day investment horizon Whitestone REIT is expected to generate 1.4 times less return on investment than National Retail. But when comparing it to its historical volatility, Whitestone REIT is 1.14 times less risky than National Retail. It trades about 0.06 of its potential returns per unit of risk. National Retail Properties is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,978  in National Retail Properties on December 30, 2024 and sell it today you would earn a total of  231.00  from holding National Retail Properties or generate 5.81% return on investment over 90 days.

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

Whitestone REIT  vs.  National Retail Properties

Whitestone REIT

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Whitestone REIT are ranked lower than 4 (%) 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.

National Retail Prop

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Retail Properties are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, National Retail may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Whitestone REIT and National Retail

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

The idea behind Whitestone REIT and National Retail Properties 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..