Correlation Between Rayonier and Weyerhaeuser

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

By analyzing existing cross correlation between Rayonier and Weyerhaeuser, you can compare the effects of market volatilities on Rayonier and Weyerhaeuser 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 Weyerhaeuser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rayonier and Weyerhaeuser.

Diversification Opportunities for Rayonier and Weyerhaeuser

0.28

Correlation Coefficient

Rayonier  Weyerhaeuser

Modest diversification

The 3 months correlation between Rayonier and Weyerhaeuser is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Rayonier and Weyerhaeuser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyerhaeuser 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 Weyerhaeuser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weyerhaeuser has no effect on the direction of Rayonier i.e., Rayonier and Weyerhaeuser go up and down completely randomly.

Pair Corralation between Rayonier and Weyerhaeuser

Considering the 90-day investment horizon Rayonier is expected to generate 0.82 times more return on investment than Weyerhaeuser. However, Rayonier is 1.22 times less risky than Weyerhaeuser. It trades about 0.11 of its potential returns per unit of risk. Weyerhaeuser is currently generating about 0.07 per unit of risk. If you would invest  2,564  in Rayonier on December 30, 2024 and sell it today you would earn a total of  219.00  from holding Rayonier or generate 8.54% return on investment over 90 days.

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

Rayonier  vs.  Weyerhaeuser

Rayonier

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rayonier are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Rayonier may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Weyerhaeuser

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Weyerhaeuser are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Weyerhaeuser may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Rayonier and Weyerhaeuser

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

The idea behind Rayonier and Weyerhaeuser 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.