Correlation Between AEON STORES and Rayonier Advanced

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

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

Diversification Opportunities for AEON STORES and Rayonier Advanced

-0.06

Correlation Coefficient

AEON STORES  Rayonier Advanced

Good diversification

The 3 months correlation between AEON and Rayonier is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding AEON STORES and Rayonier Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rayonier Advanced and AEON STORES 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 AEON STORES 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 AEON STORES i.e., AEON STORES and Rayonier Advanced go up and down completely randomly.

Pair Corralation between AEON STORES and Rayonier Advanced

Assuming the 90 days trading horizon AEON STORES is expected to generate 0.25 times more return on investment than Rayonier Advanced. However, AEON STORES is 4.0 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 -0.13 per unit of risk. If you would invest  6.05  in AEON STORES on December 22, 2024 and sell it today you would lose (0.15) from holding AEON STORES or give up 2.48% of portfolio value over 90 days.

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

AEON STORES  vs.  Rayonier Advanced Materials

AEON STORES

Risk-Adjusted Performance

Very Weak

Over the last 90 days AEON STORES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AEON STORES is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Rayonier Advanced

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rayonier Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with AEON STORES and Rayonier Advanced

The main advantage of trading using opposite AEON STORES and Rayonier Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEON STORES 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 AEON STORES 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.