Correlation Between Rayonier Advanced and Big Yellow

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

Diversification Opportunities for Rayonier Advanced and Big Yellow

-0.77

Correlation Coefficient

Rayonier Advanced  Big Yellow

Pay attention - limited upside

The 3 months correlation between Rayonier and Big is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Rayonier Advanced Materials and Big Yellow Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Yellow Group 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 Big Yellow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Yellow Group has no effect on the direction of Rayonier Advanced i.e., Rayonier Advanced and Big Yellow go up and down completely randomly.

Pair Corralation between Rayonier Advanced and Big Yellow

Assuming the 90 days horizon Rayonier Advanced Materials is expected to under-perform the Big Yellow. In addition to that, Rayonier Advanced is 3.74 times more volatile than Big Yellow Group. It trades about -0.13 of its total potential returns per unit of risk. Big Yellow Group is currently generating about 0.39 per unit of volatility. If you would invest  2,790  in Big Yellow Group on December 20, 2024 and sell it today you would earn a total of  800.00  from holding Big Yellow Group or generate 28.67% return on investment over 90 days.

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

Rayonier Advanced Materials  vs.  Big Yellow Group

Rayonier Advanced

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rayonier Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Big Yellow Group

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Big Yellow Group are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Big Yellow reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rayonier Advanced and Big Yellow

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

The idea behind Rayonier Advanced Materials and Big Yellow Group 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.

Check out your portfolio center.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.