Correlation Between Rayonier and Iron Mountain

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

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

Diversification Opportunities for Rayonier and Iron Mountain

0.81

Correlation Coefficient

Rayonier  Iron Mountain

Very poor diversification

The 3 months correlation between Rayonier and Iron is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Rayonier and Iron Mountain Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Mountain and Rayonier 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 are associated (or correlated) with Iron Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Mountain has no effect on the direction of Rayonier i.e., Rayonier and Iron Mountain go up and down completely randomly.

Pair Corralation between Rayonier and Iron Mountain

Considering the 90-day investment horizon Rayonier is expected to under-perform the Iron Mountain. But the stock apears to be less risky and, when comparing its historical volatility, Rayonier is 1.1 times less risky than Iron Mountain. The stock trades about 0.0 of its potential returns per unit of risk. The Iron Mountain Incorporated is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4,877  in Iron Mountain Incorporated on December 3, 2024 and sell it today you would earn a total of  4,440  from holding Iron Mountain Incorporated or generate 91.04% return on investment over 90 days.

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

Rayonier  vs.  Iron Mountain Incorporated

Rayonier

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rayonier has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

Iron Mountain

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iron Mountain Incorporated 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 basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Rayonier and Iron Mountain

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

The idea behind Rayonier and Iron Mountain Incorporated 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.