Correlation Between BASF SE and Rayonier Advanced
Can any of the company-specific risk be diversified away by investing in both BASF SE and Rayonier Advanced 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 BASF SE and Rayonier Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BASF SE and Rayonier Advanced Materials, you can compare the effects of market volatilities on BASF SE and Rayonier Advanced 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 BASF SE with a short position of Rayonier Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of BASF SE and Rayonier Advanced.
Diversification Opportunities for BASF SE and Rayonier Advanced
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BASF and Rayonier is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding BASF SE and Rayonier Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rayonier Advanced and BASF SE 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 BASF SE are associated (or correlated) with Rayonier Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rayonier Advanced has no effect on the direction of BASF SE i.e., BASF SE and Rayonier Advanced go up and down completely randomly.
Pair Corralation between BASF SE and Rayonier Advanced
Assuming the 90 days horizon BASF SE is expected to under-perform the Rayonier Advanced. But the stock apears to be less risky and, when comparing its historical volatility, BASF SE is 2.76 times less risky than Rayonier Advanced. The stock trades about -0.08 of its potential returns per unit of risk. The Rayonier Advanced Materials is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 745.00 in Rayonier Advanced Materials on September 4, 2024 and sell it today you would earn a total of 80.00 from holding Rayonier Advanced Materials or generate 10.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BASF SE vs. Rayonier Advanced Materials
Performance |
| Timeline |
| BASF SE |
| Rayonier Advanced |
BASF SE and Rayonier Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BASF SE and Rayonier Advanced
The main advantage of trading using opposite BASF SE and Rayonier Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BASF SE position performs unexpectedly, Rayonier Advanced 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 Rayonier Advanced will offset losses from the drop in Rayonier Advanced's long position.| BASF SE vs. Allianz SE | BASF SE vs. Siemens Aktiengesellschaft | BASF SE vs. Bayer AG NA | BASF SE vs. SAP SE |
| Rayonier Advanced vs. AIR LIQUIDE ADR | Rayonier Advanced vs. BASF SE | Rayonier Advanced vs. BASF SE | Rayonier Advanced vs. BASF SE |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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