Correlation Between Ryman Healthcare and InnovAge Holding

Can any of the company-specific risk be diversified away by investing in both Ryman Healthcare and InnovAge Holding 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 InnovAge Holding 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 InnovAge Holding Corp, you can compare the effects of market volatilities on Ryman Healthcare and InnovAge Holding 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 InnovAge Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ryman Healthcare and InnovAge Holding.

Diversification Opportunities for Ryman Healthcare and InnovAge Holding

0.7

Correlation Coefficient

Ryman Healthcare  InnovAge Holding

Poor diversification

The 3 months correlation between Ryman and InnovAge is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ryman Healthcare Limited and InnovAge Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InnovAge Holding Corp 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 InnovAge Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InnovAge Holding Corp has no effect on the direction of Ryman Healthcare i.e., Ryman Healthcare and InnovAge Holding go up and down completely randomly.

Pair Corralation between Ryman Healthcare and InnovAge Holding

Assuming the 90 days horizon Ryman Healthcare Limited is expected to generate 0.74 times more return on investment than InnovAge Holding. However, Ryman Healthcare Limited is 1.36 times less risky than InnovAge Holding. It trades about -0.05 of its potential returns per unit of risk. InnovAge Holding Corp is currently generating about -0.12 per unit of risk. If you would invest  282.00  in Ryman Healthcare Limited on September 13, 2024 and sell it today you would lose (21.00) from holding Ryman Healthcare Limited or give up 7.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Ryman Healthcare Limited  vs.  InnovAge Holding Corp

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 latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

InnovAge Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days InnovAge Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Ryman Healthcare and InnovAge Holding

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

The idea behind Ryman Healthcare Limited and InnovAge Holding Corp 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.