Correlation Between EPR Properties and Rayonier

Can any of the company-specific risk be diversified away by investing in both EPR Properties 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 EPR Properties and Rayonier into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EPR Properties and Rayonier, you can compare the effects of market volatilities on EPR Properties 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 EPR Properties with a short position of Rayonier. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPR Properties and Rayonier.

Diversification Opportunities for EPR Properties and Rayonier

0.64

Correlation Coefficient

EPR Properties  Rayonier

Poor diversification

The 3 months correlation between EPR and Rayonier is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding EPR Properties and Rayonier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rayonier and EPR Properties 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 EPR Properties 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 EPR Properties i.e., EPR Properties and Rayonier go up and down completely randomly.

Pair Corralation between EPR Properties and Rayonier

Considering the 90-day investment horizon EPR Properties is expected to under-perform the Rayonier. But the stock apears to be less risky and, when comparing its historical volatility, EPR Properties is 1.05 times less risky than Rayonier. The stock trades about -0.05 of its potential returns per unit of risk. The Rayonier is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,055  in Rayonier on September 4, 2024 and sell it today you would earn a total of  116.00  from holding Rayonier or generate 3.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

EPR Properties  vs.  Rayonier

EPR Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EPR Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, EPR Properties is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Rayonier

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rayonier are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Rayonier is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with EPR Properties and Rayonier

The main advantage of trading using opposite EPR Properties and Rayonier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPR Properties 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.

The idea behind EPR Properties and Rayonier pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.