Correlation Between Whitestone REIT and Pebblebrook Hotel

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

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

Diversification Opportunities for Whitestone REIT and Pebblebrook Hotel

-0.66

Correlation Coefficient

Whitestone REIT  Pebblebrook Hotel

Excellent diversification

The 3 months correlation between Whitestone and Pebblebrook is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Whitestone REIT and Pebblebrook Hotel Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pebblebrook Hotel 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 Pebblebrook Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pebblebrook Hotel Trust has no effect on the direction of Whitestone REIT i.e., Whitestone REIT and Pebblebrook Hotel go up and down completely randomly.

Pair Corralation between Whitestone REIT and Pebblebrook Hotel

Considering the 90-day investment horizon Whitestone REIT is expected to generate 0.59 times more return on investment than Pebblebrook Hotel. However, Whitestone REIT is 1.69 times less risky than Pebblebrook Hotel. It trades about 0.03 of its potential returns per unit of risk. Pebblebrook Hotel Trust is currently generating about -0.21 per unit of risk. If you would invest  1,406  in Whitestone REIT on December 25, 2024 and sell it today you would earn a total of  25.00  from holding Whitestone REIT or generate 1.78% return on investment over 90 days.

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

Whitestone REIT  vs.  Pebblebrook Hotel Trust

Whitestone REIT

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Whitestone REIT are ranked lower than 2 (%) 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.

Pebblebrook Hotel Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pebblebrook Hotel Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite sluggish performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Whitestone REIT and Pebblebrook Hotel

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

The idea behind Whitestone REIT and Pebblebrook Hotel 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.