Correlation Between Rafael Holdings and CoStar

Can any of the company-specific risk be diversified away by investing in both Rafael Holdings and CoStar 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 CoStar 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 CoStar Group, you can compare the effects of market volatilities on Rafael Holdings and CoStar 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 CoStar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rafael Holdings and CoStar.

Diversification Opportunities for Rafael Holdings and CoStar

0.37

Correlation Coefficient

Rafael Holdings  CoStar

Weak diversification

The 3 months correlation between Rafael and CoStar is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Rafael Holdings Class and CoStar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoStar Group 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 CoStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoStar Group has no effect on the direction of Rafael Holdings i.e., Rafael Holdings and CoStar go up and down completely randomly.

Pair Corralation between Rafael Holdings and CoStar

Considering the 90-day investment horizon Rafael Holdings Class is expected to generate 1.02 times more return on investment than CoStar. However, Rafael Holdings is 1.02 times more volatile than CoStar Group. It trades about -0.13 of its potential returns per unit of risk. CoStar Group is currently generating about -0.57 per unit of risk. If you would invest  159.00  in Rafael Holdings Class on March 5, 2024 and sell it today you would lose (6.00) from holding Rafael Holdings Class or give up 3.77% of portfolio value over 90 days.

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

Rafael Holdings Class  vs.  CoStar Group

Rafael Holdings Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rafael Holdings Class has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

CoStar Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CoStar Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest sluggish performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Rafael Holdings and CoStar

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

The idea behind Rafael Holdings Class and CoStar 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.