Correlation Between Rafael Holdings and Seaport Entertainment

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

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

Diversification Opportunities for Rafael Holdings and Seaport Entertainment

-0.17

Correlation Coefficient

Rafael Holdings  Seaport Entertainment

Good diversification

The 3 months correlation between Rafael and Seaport is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Rafael Holdings Class and Seaport Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seaport Entertainment and Rafael Holdings 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 Rafael Holdings Class are associated (or correlated) with Seaport Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seaport Entertainment has no effect on the direction of Rafael Holdings i.e., Rafael Holdings and Seaport Entertainment go up and down completely randomly.

Pair Corralation between Rafael Holdings and Seaport Entertainment

Considering the 90-day investment horizon Rafael Holdings Class is expected to generate 0.76 times more return on investment than Seaport Entertainment. However, Rafael Holdings Class is 1.31 times less risky than Seaport Entertainment. It trades about 0.09 of its potential returns per unit of risk. Seaport Entertainment Group is currently generating about 0.06 per unit of risk. If you would invest  153.00  in Rafael Holdings Class on September 4, 2024 and sell it today you would earn a total of  28.00  from holding Rafael Holdings Class or generate 18.3% return on investment over 90 days.

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

Rafael Holdings Class  vs.  Seaport Entertainment Group

Rafael Holdings Class

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rafael Holdings Class are ranked lower than 7 (%) 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.

Seaport Entertainment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Seaport Entertainment Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Seaport Entertainment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rafael Holdings and Seaport Entertainment

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

The idea behind Rafael Holdings Class and Seaport Entertainment Group 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.