Correlation Between Ryman Healthcare and Sienna Senior

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

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

Diversification Opportunities for Ryman Healthcare and Sienna Senior

0.65

Correlation Coefficient

Ryman Healthcare  Sienna Senior

Poor diversification

The 3 months correlation between Ryman and Sienna is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ryman Healthcare Limited and Sienna Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sienna Senior Living and Ryman Healthcare 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 Ryman Healthcare Limited are associated (or correlated) with Sienna Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sienna Senior Living has no effect on the direction of Ryman Healthcare i.e., Ryman Healthcare and Sienna Senior go up and down completely randomly.

Pair Corralation between Ryman Healthcare and Sienna Senior

Assuming the 90 days horizon Ryman Healthcare Limited is expected to under-perform the Sienna Senior. But the stock apears to be less risky and, when comparing its historical volatility, Ryman Healthcare Limited is 1.17 times less risky than Sienna Senior. The stock trades about -0.11 of its potential returns per unit of risk. The Sienna Senior Living is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  1,125  in Sienna Senior Living on October 27, 2024 and sell it today you would lose (150.00) from holding Sienna Senior Living or give up 13.33% of portfolio value over 90 days.

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

Ryman Healthcare Limited  vs.  Sienna Senior Living

Ryman Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ryman Healthcare Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Sienna Senior Living

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sienna Senior Living has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Ryman Healthcare and Sienna Senior

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

The idea behind Ryman Healthcare Limited and Sienna Senior Living 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.