Correlation Between Rayonier and Crown Castle

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

By analyzing existing cross correlation between Rayonier and Crown Castle, you can compare the effects of market volatilities on Rayonier and Crown Castle 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 Crown Castle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rayonier and Crown Castle.

Diversification Opportunities for Rayonier and Crown Castle

0.48

Correlation Coefficient

Rayonier  Crown Castle

Very weak diversification

The 3 months correlation between Rayonier and Crown is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Rayonier and Crown Castle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Castle 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 Crown Castle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Castle has no effect on the direction of Rayonier i.e., Rayonier and Crown Castle go up and down completely randomly.

Pair Corralation between Rayonier and Crown Castle

Considering the 90-day investment horizon Rayonier is expected to generate 0.79 times more return on investment than Crown Castle. However, Rayonier is 1.27 times less risky than Crown Castle. It trades about -0.01 of its potential returns per unit of risk. Crown Castle is currently generating about -0.17 per unit of risk. If you would invest  3,121  in Rayonier on September 12, 2024 and sell it today you would lose (41.00) from holding Rayonier or give up 1.31% of portfolio value over 90 days.

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

Rayonier  vs.  Crown Castle

Rayonier

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Rayonier has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Rayonier is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Crown Castle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Castle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Rayonier and Crown Castle

The main advantage of trading using opposite Rayonier and Crown Castle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rayonier position performs unexpectedly, Crown Castle 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 Crown Castle will offset losses from the drop in Crown Castle's long position.

The idea behind Rayonier and Crown Castle 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.