Correlation Between AFC Gamma and Rayonier

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

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

Diversification Opportunities for AFC Gamma and Rayonier

0.94

Correlation Coefficient

AFC Gamma  Rayonier

Almost no diversification

The 3 months correlation between AFC and Rayonier is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding AFC Gamma and Rayonier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rayonier and AFC Gamma 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 AFC Gamma are associated (or correlated) with Rayonier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rayonier has no effect on the direction of AFC Gamma i.e., AFC Gamma and Rayonier go up and down completely randomly.

Pair Corralation between AFC Gamma and Rayonier

Given the investment horizon of 90 days AFC Gamma is expected to generate 1.33 times more return on investment than Rayonier. However, AFC Gamma is 1.33 times more volatile than Rayonier. It trades about 0.03 of its potential returns per unit of risk. Rayonier is currently generating about -0.02 per unit of risk. If you would invest  735.00  in AFC Gamma on October 22, 2024 and sell it today you would earn a total of  127.00  from holding AFC Gamma or generate 17.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

AFC Gamma  vs.  Rayonier

AFC Gamma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AFC Gamma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Rayonier

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rayonier has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with AFC Gamma and Rayonier

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

The idea behind AFC Gamma and Rayonier 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.