Correlation Between Rayonier Advanced and InterContinental
Can any of the company-specific risk be diversified away by investing in both Rayonier Advanced and InterContinental 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 InterContinental 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 InterContinental Hotels Group, you can compare the effects of market volatilities on Rayonier Advanced and InterContinental 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 InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rayonier Advanced and InterContinental.
Diversification Opportunities for Rayonier Advanced and InterContinental
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Rayonier and InterContinental is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Rayonier Advanced Materials and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels 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 InterContinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InterContinental Hotels has no effect on the direction of Rayonier Advanced i.e., Rayonier Advanced and InterContinental go up and down completely randomly.
Pair Corralation between Rayonier Advanced and InterContinental
Assuming the 90 days horizon Rayonier Advanced Materials is expected to generate 2.62 times more return on investment than InterContinental. However, Rayonier Advanced is 2.62 times more volatile than InterContinental Hotels Group. It trades about 0.08 of its potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.11 per unit of risk. If you would invest 520.00 in Rayonier Advanced Materials on September 22, 2024 and sell it today you would earn a total of 180.00 from holding Rayonier Advanced Materials or generate 34.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rayonier Advanced Materials vs. InterContinental Hotels Group
Performance |
| Timeline |
| Rayonier Advanced |
| InterContinental Hotels |
Rayonier Advanced and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rayonier Advanced and InterContinental
The main advantage of trading using opposite Rayonier Advanced and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rayonier Advanced position performs unexpectedly, InterContinental 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 InterContinental will offset losses from the drop in InterContinental's long position.| Rayonier Advanced vs. Air Liquide SA | Rayonier Advanced vs. AIR LIQUIDE ADR | Rayonier Advanced vs. Air Products and | Rayonier Advanced vs. Shin Etsu Chemical Co |
| InterContinental vs. Marriott International | InterContinental vs. Hilton Worldwide Holdings | InterContinental vs. H World Group | InterContinental vs. Hyatt Hotels |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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