Correlation Between NiSource and Ryman Hospitality

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

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

Diversification Opportunities for NiSource and Ryman Hospitality

0.6

Correlation Coefficient

NiSource  Ryman Hospitality

Poor diversification

The 3 months correlation between NiSource and Ryman is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding NiSource and Ryman Hospitality Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryman Hospitality and NiSource 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 NiSource 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 NiSource i.e., NiSource and Ryman Hospitality go up and down completely randomly.

Pair Corralation between NiSource and Ryman Hospitality

Allowing for the 90-day total investment horizon NiSource is expected to generate 1.04 times less return on investment than Ryman Hospitality. But when comparing it to its historical volatility, NiSource is 1.34 times less risky than Ryman Hospitality. It trades about 0.07 of its potential returns per unit of risk. Ryman Hospitality Properties is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  7,534  in Ryman Hospitality Properties on September 28, 2024 and sell it today you would earn a total of  3,034  from holding Ryman Hospitality Properties or generate 40.26% return on investment over 90 days.

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

NiSource  vs.  Ryman Hospitality Properties

NiSource

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NiSource are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, NiSource may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 NiSource and Ryman Hospitality

The main advantage of trading using opposite NiSource and Ryman Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NiSource 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 NiSource 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.