Correlation Between Rayonier Advanced and Celanese

Can any of the company-specific risk be diversified away by investing in both Rayonier Advanced and Celanese 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 Celanese 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 Celanese, you can compare the effects of market volatilities on Rayonier Advanced and Celanese 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 Celanese. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rayonier Advanced and Celanese.

Diversification Opportunities for Rayonier Advanced and Celanese

-0.17

Correlation Coefficient

Rayonier Advanced  Celanese

Good diversification

The 3 months correlation between Rayonier and Celanese is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Rayonier Advanced Materials and Celanese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celanese 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 Celanese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celanese has no effect on the direction of Rayonier Advanced i.e., Rayonier Advanced and Celanese go up and down completely randomly.

Pair Corralation between Rayonier Advanced and Celanese

Given the investment horizon of 90 days Rayonier Advanced Materials is expected to under-perform the Celanese. But the stock apears to be less risky and, when comparing its historical volatility, Rayonier Advanced Materials is 1.13 times less risky than Celanese. The stock trades about -0.48 of its potential returns per unit of risk. The Celanese is currently generating about -0.24 of returns per unit of risk over similar time horizon. If you would invest  7,650  in Celanese on September 26, 2024 and sell it today you would lose (730.00) from holding Celanese or give up 9.54% of portfolio value over 90 days.

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

Rayonier Advanced Materials  vs.  Celanese

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.

Celanese

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celanese has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Rayonier Advanced and Celanese

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

The idea behind Rayonier Advanced Materials and Celanese 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..