Correlation Between Bassett Furniture and Ryman Hospitality

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

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

Diversification Opportunities for Bassett Furniture and Ryman Hospitality

0.58

Correlation Coefficient

Bassett Furniture  Ryman Hospitality

Very weak diversification

The 3 months correlation between Bassett and Ryman is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and Ryman Hospitality Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryman Hospitality and Bassett Furniture 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 Bassett Furniture Industries are associated (or correlated) with Ryman Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ryman Hospitality has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and Ryman Hospitality go up and down completely randomly.

Pair Corralation between Bassett Furniture and Ryman Hospitality

Given the investment horizon of 90 days Bassett Furniture is expected to generate 2.24 times less return on investment than Ryman Hospitality. In addition to that, Bassett Furniture is 1.45 times more volatile than Ryman Hospitality Properties. It trades about 0.04 of its total potential returns per unit of risk. Ryman Hospitality Properties is currently generating about 0.13 per unit of volatility. If you would invest  10,189  in Ryman Hospitality Properties on September 17, 2024 and sell it today you would earn a total of  1,135  from holding Ryman Hospitality Properties or generate 11.14% return on investment over 90 days.

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

Bassett Furniture Industries  vs.  Ryman Hospitality Properties

Bassett Furniture

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bassett Furniture Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Bassett Furniture is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Ryman Hospitality

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ryman Hospitality Properties are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish technical indicators, Ryman Hospitality may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bassett Furniture and Ryman Hospitality

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

The idea behind Bassett Furniture Industries and Ryman Hospitality Properties 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.