Correlation Between First Industrial and Rafael Holdings

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

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

Diversification Opportunities for First Industrial and Rafael Holdings

-0.44

Correlation Coefficient

First Industrial  Rafael Holdings

Very good diversification

The 3 months correlation between First and Rafael is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty 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 First Industrial 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 First Industrial Realty 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 First Industrial i.e., First Industrial and Rafael Holdings go up and down completely randomly.

Pair Corralation between First Industrial and Rafael Holdings

Allowing for the 90-day total investment horizon First Industrial Realty is expected to under-perform the Rafael Holdings. But the stock apears to be less risky and, when comparing its historical volatility, First Industrial Realty is 3.26 times less risky than Rafael Holdings. The stock trades about -0.08 of its potential returns per unit of risk. The Rafael Holdings Class is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  149.00  in Rafael Holdings Class on September 3, 2024 and sell it today you would earn a total of  39.00  from holding Rafael Holdings Class or generate 26.17% return on investment over 90 days.

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

First Industrial Realty  vs.  Rafael Holdings Class

First Industrial Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Industrial Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, First Industrial is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Rafael Holdings Class

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rafael Holdings Class are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent 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 First Industrial and Rafael Holdings

The main advantage of trading using opposite First Industrial and Rafael Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Industrial 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 First Industrial Realty 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.