Correlation Between Rayonier and Equinix
Can any of the company-specific risk be diversified away by investing in both Rayonier and Equinix 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 Equinix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rayonier and Equinix, you can compare the effects of market volatilities on Rayonier and Equinix 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 Equinix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rayonier and Equinix.
Diversification Opportunities for Rayonier and Equinix
Very weak diversification
The 3 months correlation between Rayonier and Equinix is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Rayonier and Equinix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinix 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 Equinix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinix has no effect on the direction of Rayonier i.e., Rayonier and Equinix go up and down completely randomly.
Pair Corralation between Rayonier and Equinix
Considering the 90-day investment horizon Rayonier is expected to under-perform the Equinix. But the stock apears to be less risky and, when comparing its historical volatility, Rayonier is 1.18 times less risky than Equinix. The stock trades about -0.17 of its potential returns per unit of risk. The Equinix is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 91,559 in Equinix on November 18, 2024 and sell it today you would earn a total of 1,801 from holding Equinix or generate 1.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rayonier vs. Equinix
Performance |
| Timeline |
| Rayonier |
| Equinix |
Rayonier and Equinix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rayonier and Equinix
The main advantage of trading using opposite Rayonier and Equinix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rayonier position performs unexpectedly, Equinix 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 Equinix will offset losses from the drop in Equinix's long position.| Rayonier vs. Weyerhaeuser | Rayonier vs. Lamar Advertising | Rayonier vs. Farmland Partners | Rayonier vs. Gladstone Land |
| Equinix vs. Crown Castle | Equinix vs. American Tower Corp | Equinix vs. Iron Mountain Incorporated | Equinix vs. Hannon Armstrong Sustainable |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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