Correlation Between Fortuna Silver and Rayonier Advanced

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

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

Diversification Opportunities for Fortuna Silver and Rayonier Advanced

-0.09

Correlation Coefficient

Fortuna Silver  Rayonier Advanced

Good diversification

The 3 months correlation between Fortuna and Rayonier is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Fortuna Silver Mines and Rayonier Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rayonier Advanced and Fortuna Silver 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 Fortuna Silver Mines 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 Fortuna Silver i.e., Fortuna Silver and Rayonier Advanced go up and down completely randomly.

Pair Corralation between Fortuna Silver and Rayonier Advanced

Considering the 90-day investment horizon Fortuna Silver Mines is expected to generate 0.92 times more return on investment than Rayonier Advanced. However, Fortuna Silver Mines is 1.09 times less risky than Rayonier Advanced. It trades about -0.02 of its potential returns per unit of risk. Rayonier Advanced Materials is currently generating about -0.04 per unit of risk. If you would invest  463.00  in Fortuna Silver Mines on September 30, 2024 and sell it today you would lose (31.00) from holding Fortuna Silver Mines or give up 6.7% of portfolio value over 90 days.

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

Fortuna Silver Mines  vs.  Rayonier Advanced Materials

Fortuna Silver Mines

Risk-Adjusted Performance

0 of 100

Very Weak

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

The main advantage of trading using opposite Fortuna Silver and Rayonier Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortuna Silver 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 Fortuna Silver Mines 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.