Correlation Between Ryman Hospitality and Starbucks

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

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

Diversification Opportunities for Ryman Hospitality and Starbucks

0.56

Correlation Coefficient

Ryman Hospitality  Starbucks

Very weak diversification

The 3 months correlation between Ryman and Starbucks is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ryman Hospitality Properties and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks and Ryman 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 Ryman Hospitality Properties are associated (or correlated) with Starbucks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbucks has no effect on the direction of Ryman Hospitality i.e., Ryman Hospitality and Starbucks go up and down completely randomly.

Pair Corralation between Ryman Hospitality and Starbucks

Considering the 90-day investment horizon Ryman Hospitality Properties is expected to generate 0.76 times more return on investment than Starbucks. However, Ryman Hospitality Properties is 1.32 times less risky than Starbucks. It trades about -0.01 of its potential returns per unit of risk. Starbucks is currently generating about -0.24 per unit of risk. If you would invest  11,119  in Ryman Hospitality Properties on September 17, 2024 and sell it today you would lose (43.00) from holding Ryman Hospitality Properties or give up 0.39% of portfolio value over 90 days.

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

Ryman Hospitality Properties  vs.  Starbucks

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.

Starbucks

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Starbucks are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Starbucks is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ryman Hospitality and Starbucks

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

The idea behind Ryman Hospitality Properties and Starbucks 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.