Correlation Between Gold Road and Rayonier Advanced

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

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

Diversification Opportunities for Gold Road and Rayonier Advanced

-0.36

Correlation Coefficient

Gold Road  Rayonier Advanced

Very good diversification

The 3 months correlation between Gold and Rayonier is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Rayonier Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rayonier Advanced and Gold Road 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 Gold Road Resources 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 Gold Road i.e., Gold Road and Rayonier Advanced go up and down completely randomly.

Pair Corralation between Gold Road and Rayonier Advanced

Assuming the 90 days horizon Gold Road Resources is expected to generate 0.52 times more return on investment than Rayonier Advanced. However, Gold Road Resources is 1.93 times less risky than Rayonier Advanced. It trades about 0.2 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  120.00  in Gold Road Resources on December 20, 2024 and sell it today you would earn a total of  32.00  from holding Gold Road Resources or generate 26.67% return on investment over 90 days.

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

Gold Road Resources  vs.  Rayonier Advanced Materials

Gold Road Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Road Resources are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gold Road reported solid returns over the last few months and may actually be approaching a breakup point.

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 Gold Road and Rayonier Advanced

The main advantage of trading using opposite Gold Road and Rayonier Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road 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 Gold Road Resources 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.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.