Correlation Between Rayonier Advanced and AdvanSix

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

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

Diversification Opportunities for Rayonier Advanced and AdvanSix

0.51

Correlation Coefficient

Rayonier Advanced  AdvanSix

Very weak diversification

The 3 months correlation between Rayonier and AdvanSix is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Rayonier Advanced Materials and AdvanSix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvanSix and Rayonier Advanced 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 Rayonier Advanced Materials are associated (or correlated) with AdvanSix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvanSix has no effect on the direction of Rayonier Advanced i.e., Rayonier Advanced and AdvanSix go up and down completely randomly.

Pair Corralation between Rayonier Advanced and AdvanSix

Given the investment horizon of 90 days Rayonier Advanced Materials is expected to under-perform the AdvanSix. In addition to that, Rayonier Advanced is 1.16 times more volatile than AdvanSix. It trades about -0.48 of its total potential returns per unit of risk. AdvanSix is currently generating about -0.41 per unit of volatility. If you would invest  3,234  in AdvanSix on September 26, 2024 and sell it today you would lose (390.00) from holding AdvanSix or give up 12.06% of portfolio value over 90 days.

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

Rayonier Advanced Materials  vs.  AdvanSix

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.

AdvanSix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AdvanSix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, AdvanSix is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rayonier Advanced and AdvanSix

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

The idea behind Rayonier Advanced Materials and AdvanSix 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.