Correlation Between Franco Nevada and Rayonier Advanced

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

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

Diversification Opportunities for Franco Nevada and Rayonier Advanced

-0.57

Correlation Coefficient

Franco Nevada  Rayonier Advanced

Excellent diversification

The 3 months correlation between Franco and Rayonier is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Franco Nevada and Rayonier Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rayonier Advanced and Franco Nevada 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 Franco Nevada 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 Franco Nevada i.e., Franco Nevada and Rayonier Advanced go up and down completely randomly.

Pair Corralation between Franco Nevada and Rayonier Advanced

Considering the 90-day investment horizon Franco Nevada is expected to generate 0.9 times more return on investment than Rayonier Advanced. However, Franco Nevada is 1.11 times less risky than Rayonier Advanced. It trades about -0.14 of its potential returns per unit of risk. Rayonier Advanced Materials is currently generating about -0.58 per unit of risk. If you would invest  12,109  in Franco Nevada on September 21, 2024 and sell it today you would lose (535.50) from holding Franco Nevada or give up 4.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Franco Nevada  vs.  Rayonier Advanced Materials

Franco Nevada

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franco Nevada has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

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 Franco Nevada and Rayonier Advanced

The main advantage of trading using opposite Franco Nevada and Rayonier Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franco Nevada 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 Franco Nevada 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.