Correlation Between Omega Healthcare and HCA Healthcare
Can any of the company-specific risk be diversified away by investing in both Omega Healthcare and HCA Healthcare 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 Omega Healthcare and HCA Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Omega Healthcare Investors and HCA Healthcare, you can compare the effects of market volatilities on Omega Healthcare and HCA Healthcare 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 Omega Healthcare with a short position of HCA Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Healthcare and HCA Healthcare.
Diversification Opportunities for Omega Healthcare and HCA Healthcare
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Omega and HCA is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare and Omega 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 Omega Healthcare Investors are associated (or correlated) with HCA Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCA Healthcare has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and HCA Healthcare go up and down completely randomly.
Pair Corralation between Omega Healthcare and HCA Healthcare
Assuming the 90 days trading horizon Omega Healthcare Investors is expected to generate 0.93 times more return on investment than HCA Healthcare. However, Omega Healthcare Investors is 1.08 times less risky than HCA Healthcare. It trades about 0.03 of its potential returns per unit of risk. HCA Healthcare is currently generating about -0.29 per unit of risk. If you would invest 4,048 in Omega Healthcare Investors on September 2, 2024 and sell it today you would earn a total of 24.00 from holding Omega Healthcare Investors or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Omega Healthcare Investors vs. HCA Healthcare
Performance |
| Timeline |
| Omega Healthcare Inv |
| HCA Healthcare |
Omega Healthcare and HCA Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omega Healthcare and HCA Healthcare
The main advantage of trading using opposite Omega Healthcare and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Healthcare position performs unexpectedly, HCA Healthcare 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 HCA Healthcare will offset losses from the drop in HCA Healthcare's long position.| Omega Healthcare vs. Uniper SE | Omega Healthcare vs. Mulberry Group PLC | Omega Healthcare vs. London Security Plc | Omega Healthcare vs. Triad Group PLC |
| HCA Healthcare vs. Uniper SE | HCA Healthcare vs. Mulberry Group PLC | HCA Healthcare vs. London Security Plc | HCA Healthcare vs. Triad Group PLC |
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 Stocks Directory module to find actively traded stocks across global markets.
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