Correlation Between Alamos Gold and Rayonier Advanced

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

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

Diversification Opportunities for Alamos Gold and Rayonier Advanced

-0.61

Correlation Coefficient

Alamos Gold  Rayonier Advanced

Excellent diversification

The 3 months correlation between Alamos and Rayonier is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Alamos Gold and Rayonier Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rayonier Advanced and Alamos Gold 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 Alamos Gold are associated (or correlated) with Rayonier Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rayonier Advanced has no effect on the direction of Alamos Gold i.e., Alamos Gold and Rayonier Advanced go up and down completely randomly.

Pair Corralation between Alamos Gold and Rayonier Advanced

Considering the 90-day investment horizon Alamos Gold is expected to generate 2.87 times less return on investment than Rayonier Advanced. But when comparing it to its historical volatility, Alamos Gold is 2.08 times less risky than Rayonier Advanced. It trades about 0.04 of its potential returns per unit of risk. Rayonier Advanced Materials is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  608.00  in Rayonier Advanced Materials on September 21, 2024 and sell it today you would earn a total of  121.00  from holding Rayonier Advanced Materials or generate 19.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.07%
Values	Daily Returns

Alamos Gold  vs.  Rayonier Advanced Materials

Alamos Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alamos Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Rayonier Advanced

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rayonier Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Rayonier Advanced is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Alamos Gold and Rayonier Advanced

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

The idea behind Alamos Gold and Rayonier Advanced Materials 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.