Correlation Between Fast Retailing and Ryman Hospitality

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

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

Diversification Opportunities for Fast Retailing and Ryman Hospitality

-0.03

Correlation Coefficient

Fast Retailing  Ryman Hospitality

Good diversification

The 3 months correlation between Fast and Ryman is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Ryman Hospitality Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryman Hospitality and Fast Retailing 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 Fast Retailing Co 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 Fast Retailing i.e., Fast Retailing and Ryman Hospitality go up and down completely randomly.

Pair Corralation between Fast Retailing and Ryman Hospitality

Assuming the 90 days horizon Fast Retailing Co is expected to generate 0.15 times more return on investment than Ryman Hospitality. However, Fast Retailing Co is 6.81 times less risky than Ryman Hospitality. It trades about -0.22 of its potential returns per unit of risk. Ryman Hospitality Properties is currently generating about -0.33 per unit of risk. If you would invest  33,590  in Fast Retailing Co on October 1, 2024 and sell it today you would lose (330.00) from holding Fast Retailing Co or give up 0.98% of portfolio value over 90 days.

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

Fast Retailing Co  vs.  Ryman Hospitality Properties

Fast Retailing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fast Retailing Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fast Retailing is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Ryman Hospitality

Risk-Adjusted Performance

0 of 100

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 relatively invariable technical indicators, Ryman Hospitality is not utilizing all of its potentials. The new stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Fast Retailing and Ryman Hospitality

The main advantage of trading using opposite Fast Retailing and Ryman Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing 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 Fast Retailing Co 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.