Correlation Between Newlake Capital and Rayonier
Can any of the company-specific risk be diversified away by investing in both Newlake Capital 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 Newlake Capital and Rayonier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newlake Capital Partners and Rayonier, you can compare the effects of market volatilities on Newlake Capital 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 Newlake Capital with a short position of Rayonier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newlake Capital and Rayonier.
Diversification Opportunities for Newlake Capital and Rayonier
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Newlake and Rayonier is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Newlake Capital Partners and Rayonier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rayonier and Newlake Capital 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 Newlake Capital 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 Newlake Capital i.e., Newlake Capital and Rayonier go up and down completely randomly.
Pair Corralation between Newlake Capital and Rayonier
Given the investment horizon of 90 days Newlake Capital Partners is expected to generate 1.3 times more return on investment than Rayonier. However, Newlake Capital is 1.3 times more volatile than Rayonier. It trades about 0.04 of its potential returns per unit of risk. Rayonier is currently generating about -0.04 per unit of risk. If you would invest 1,505 in Newlake Capital Partners on November 4, 2024 and sell it today you would earn a total of 174.00 from holding Newlake Capital Partners or generate 11.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newlake Capital Partners vs. Rayonier
Performance |
| Timeline |
| Newlake Capital Partners |
| Rayonier |
Newlake Capital and Rayonier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newlake Capital and Rayonier
The main advantage of trading using opposite Newlake Capital and Rayonier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newlake Capital 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.| Newlake Capital vs. AFC Gamma | Newlake Capital vs. Alpineome Property Trust | Newlake Capital vs. Chicago Atlantic Real | Newlake Capital vs. Power REIT |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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