Correlation Between Whitestone REIT and Urban Edge

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

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

Diversification Opportunities for Whitestone REIT and Urban Edge

0.79

Correlation Coefficient

Whitestone REIT  Urban Edge

Poor diversification

The 3 months correlation between Whitestone and Urban is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Whitestone REIT and Urban Edge Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urban Edge Properties 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 Urban Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Urban Edge Properties has no effect on the direction of Whitestone REIT i.e., Whitestone REIT and Urban Edge go up and down completely randomly.

Pair Corralation between Whitestone REIT and Urban Edge

Considering the 90-day investment horizon Whitestone REIT is expected to generate 1.28 times more return on investment than Urban Edge. However, Whitestone REIT is 1.28 times more volatile than Urban Edge Properties. It trades about -0.08 of its potential returns per unit of risk. Urban Edge Properties is currently generating about -0.21 per unit of risk. If you would invest  1,469  in Whitestone REIT on September 23, 2024 and sell it today you would lose (43.00) from holding Whitestone REIT or give up 2.93% of portfolio value over 90 days.

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

Whitestone REIT  vs.  Urban Edge Properties

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 unsteady basic indicators, Whitestone REIT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Urban Edge Properties

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Urban Edge Properties are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Urban Edge is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Whitestone REIT and Urban Edge

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

The idea behind Whitestone REIT and Urban Edge 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.