Correlation Between Weyerhaeuser and Farmland Partners
Can any of the company-specific risk be diversified away by investing in both Weyerhaeuser and Farmland Partners 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 Weyerhaeuser and Farmland Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weyerhaeuser and Farmland Partners, you can compare the effects of market volatilities on Weyerhaeuser and Farmland Partners 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 Weyerhaeuser with a short position of Farmland Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weyerhaeuser and Farmland Partners.
Diversification Opportunities for Weyerhaeuser and Farmland Partners
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Weyerhaeuser and Farmland is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Weyerhaeuser and Farmland Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmland Partners and Weyerhaeuser 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 Weyerhaeuser are associated (or correlated) with Farmland Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmland Partners has no effect on the direction of Weyerhaeuser i.e., Weyerhaeuser and Farmland Partners go up and down completely randomly.
Pair Corralation between Weyerhaeuser and Farmland Partners
Allowing for the 90-day total investment horizon Weyerhaeuser is expected to generate 1.13 times more return on investment than Farmland Partners. However, Weyerhaeuser is 1.13 times more volatile than Farmland Partners. It trades about 0.28 of its potential returns per unit of risk. Farmland Partners is currently generating about -0.01 per unit of risk. If you would invest 2,799 in Weyerhaeuser on November 2, 2024 and sell it today you would earn a total of 255.00 from holding Weyerhaeuser or generate 9.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weyerhaeuser vs. Farmland Partners
Performance |
| Timeline |
| Weyerhaeuser |
| Farmland Partners |
Weyerhaeuser and Farmland Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weyerhaeuser and Farmland Partners
The main advantage of trading using opposite Weyerhaeuser and Farmland Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyerhaeuser position performs unexpectedly, Farmland Partners 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 Farmland Partners will offset losses from the drop in Farmland Partners' long position.| Weyerhaeuser vs. Rayonier | Weyerhaeuser vs. Lamar Advertising | Weyerhaeuser vs. Farmland Partners | Weyerhaeuser vs. Gladstone Land |
| Farmland Partners vs. PotlatchDeltic Corp | Farmland Partners vs. Weyerhaeuser | Farmland Partners vs. Outfront Media | Farmland Partners vs. Gaming Leisure Properties |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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