Correlation Between Diamondrock Hospitality and Ryman Hospitality

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

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

Diversification Opportunities for Diamondrock Hospitality and Ryman Hospitality

0.95

Correlation Coefficient

Diamondrock Hospitality  Ryman Hospitality

Almost no diversification

The 3 months correlation between Diamondrock and Ryman is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Diamondrock Hospitality and Ryman Hospitality Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryman Hospitality and Diamondrock Hospitality 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 Diamondrock Hospitality 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 Diamondrock Hospitality i.e., Diamondrock Hospitality and Ryman Hospitality go up and down completely randomly.

Pair Corralation between Diamondrock Hospitality and Ryman Hospitality

Considering the 90-day investment horizon Diamondrock Hospitality is expected to under-perform the Ryman Hospitality. But the stock apears to be less risky and, when comparing its historical volatility, Diamondrock Hospitality is 1.03 times less risky than Ryman Hospitality. The stock trades about -0.15 of its potential returns per unit of risk. The Ryman Hospitality Properties is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  10,490  in Ryman Hospitality Properties on December 30, 2024 and sell it today you would lose (1,313) from holding Ryman Hospitality Properties or give up 12.52% of portfolio value over 90 days.

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

Diamondrock Hospitality  vs.  Ryman Hospitality Properties

Diamondrock Hospitality

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diamondrock Hospitality 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 basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Ryman Hospitality

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ryman Hospitality Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with sluggish performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Diamondrock Hospitality and Ryman Hospitality

The main advantage of trading using opposite Diamondrock Hospitality and Ryman Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamondrock Hospitality 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 Diamondrock Hospitality 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.