Correlation Between Farmland Partners and Rayonier
Can any of the company-specific risk be diversified away by investing in both Farmland Partners and Rayonier 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 Farmland Partners and Rayonier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmland Partners and Rayonier, you can compare the effects of market volatilities on Farmland Partners and Rayonier 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 Farmland Partners with a short position of Rayonier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmland Partners and Rayonier.
Diversification Opportunities for Farmland Partners and Rayonier
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Farmland and Rayonier is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Farmland Partners and Rayonier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rayonier and Farmland Partners 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 Farmland Partners are associated (or correlated) with Rayonier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rayonier has no effect on the direction of Farmland Partners i.e., Farmland Partners and Rayonier go up and down completely randomly.
Pair Corralation between Farmland Partners and Rayonier
Considering the 90-day investment horizon Farmland Partners is expected to generate 1.46 times more return on investment than Rayonier. However, Farmland Partners is 1.46 times more volatile than Rayonier. It trades about 0.21 of its potential returns per unit of risk. Rayonier is currently generating about 0.01 per unit of risk. If you would invest 1,012 in Farmland Partners on August 23, 2024 and sell it today you would earn a total of 223.00 from holding Farmland Partners or generate 22.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farmland Partners vs. Rayonier
Performance |
| Timeline |
| Farmland Partners |
| Rayonier |
Farmland Partners and Rayonier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmland Partners and Rayonier
The main advantage of trading using opposite Farmland Partners and Rayonier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmland Partners position performs unexpectedly, Rayonier 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 will offset losses from the drop in Rayonier's long position.| Farmland Partners vs. Crown Castle | Farmland Partners vs. American Tower Corp | Farmland Partners vs. Hannon Armstrong Sustainable | Farmland Partners vs. Digital Realty Trust |
| Rayonier vs. Weyerhaeuser | Rayonier vs. Lamar Advertising | Rayonier vs. Farmland Partners | Rayonier vs. Gladstone Land |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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