Correlation Between Rayonier and Gladstone Land

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

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

Diversification Opportunities for Rayonier and Gladstone Land

-0.2

Correlation Coefficient

Rayonier  Gladstone Land

Good diversification

The 3 months correlation between Rayonier and Gladstone is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Rayonier and Gladstone Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Land 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 Gladstone Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Land has no effect on the direction of Rayonier i.e., Rayonier and Gladstone Land go up and down completely randomly.

Pair Corralation between Rayonier and Gladstone Land

Considering the 90-day investment horizon Rayonier is expected to generate 0.84 times more return on investment than Gladstone Land. However, Rayonier is 1.19 times less risky than Gladstone Land. It trades about -0.01 of its potential returns per unit of risk. Gladstone Land is currently generating about -0.08 per unit of risk. If you would invest  3,688  in Rayonier on January 25, 2024 and sell it today you would lose (643.00) from holding Rayonier or give up 17.43% of portfolio value over 90 days.

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

Rayonier  vs.  Gladstone Land

Rayonier

Risk-Adjusted Performance

0 of 100

Very 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 current stock price disarray, may contribute to short-term losses for the investors.

Gladstone Land

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gladstone Land has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Rayonier and Gladstone Land

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

The idea behind Rayonier and Gladstone Land 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .