Correlation Between Weyerhaeuser and Whitestone REIT

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

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

Diversification Opportunities for Weyerhaeuser and Whitestone REIT

-0.63

Correlation Coefficient

Weyerhaeuser  Whitestone REIT

Excellent diversification

The 3 months correlation between Weyerhaeuser and Whitestone is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Weyerhaeuser and Whitestone REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitestone REIT and Weyerhaeuser 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 Weyerhaeuser 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 Weyerhaeuser i.e., Weyerhaeuser and Whitestone REIT go up and down completely randomly.

Pair Corralation between Weyerhaeuser and Whitestone REIT

Allowing for the 90-day total investment horizon Weyerhaeuser is expected to under-perform the Whitestone REIT. But the stock apears to be less risky and, when comparing its historical volatility, Weyerhaeuser is 1.01 times less risky than Whitestone REIT. The stock trades about -0.19 of its potential returns per unit of risk. The Whitestone REIT is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,334  in Whitestone REIT on September 21, 2024 and sell it today you would earn a total of  92.00  from holding Whitestone REIT or generate 6.9% return on investment over 90 days.

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

Weyerhaeuser  vs.  Whitestone REIT

Weyerhaeuser

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Weyerhaeuser has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Whitestone REIT

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Whitestone REIT are ranked lower than 6 (%) 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 January 2025.

Pair Trading with Weyerhaeuser and Whitestone REIT

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

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.