Correlation Between American Realty and Rafael Holdings

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

By analyzing existing cross correlation between American Realty Investors and Rafael Holdings Class, you can compare the effects of market volatilities on American Realty and Rafael Holdings 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 American Realty with a short position of Rafael Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Realty and Rafael Holdings.

Diversification Opportunities for American Realty and Rafael Holdings

-0.11

Correlation Coefficient

American Realty  Rafael Holdings

Good diversification

The 3 months correlation between American and Rafael is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding American Realty Investors and Rafael Holdings Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rafael Holdings Class and American Realty 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 American Realty Investors are associated (or correlated) with Rafael Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rafael Holdings Class has no effect on the direction of American Realty i.e., American Realty and Rafael Holdings go up and down completely randomly.

Pair Corralation between American Realty and Rafael Holdings

Considering the 90-day investment horizon American Realty Investors is expected to under-perform the Rafael Holdings. In addition to that, American Realty is 1.35 times more volatile than Rafael Holdings Class. It trades about -0.07 of its total potential returns per unit of risk. Rafael Holdings Class is currently generating about 0.07 per unit of volatility. If you would invest  173.00  in Rafael Holdings Class on December 28, 2024 and sell it today you would earn a total of  20.00  from holding Rafael Holdings Class or generate 11.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

American Realty Investors  vs.  Rafael Holdings Class

American Realty Investors

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Realty Investors has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Rafael Holdings Class

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rafael Holdings Class are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Rafael Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Realty and Rafael Holdings

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

The idea behind American Realty Investors and Rafael Holdings Class 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.