Correlation Between Omega Healthcare and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Omega Healthcare and Ross Stores 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 Ross Stores 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 Ross Stores, you can compare the effects of market volatilities on Omega Healthcare and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Healthcare and Ross Stores.
Diversification Opportunities for Omega Healthcare and Ross Stores
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Omega and Ross is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Ross Stores go up and down completely randomly.
Pair Corralation between Omega Healthcare and Ross Stores
Assuming the 90 days trading horizon Omega Healthcare Investors is expected to generate 1.44 times more return on investment than Ross Stores. However, Omega Healthcare is 1.44 times more volatile than Ross Stores. It trades about 0.05 of its potential returns per unit of risk. Ross Stores is currently generating about 0.05 per unit of risk. If you would invest 2,469 in Omega Healthcare Investors on October 25, 2024 and sell it today you would earn a total of 1,231 from holding Omega Healthcare Investors or generate 49.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
Omega Healthcare Investors vs. Ross Stores
Performance |
| Timeline |
| Omega Healthcare Inv |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Ross Stores |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Omega Healthcare and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omega Healthcare and Ross Stores
The main advantage of trading using opposite Omega Healthcare and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Healthcare position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.| Omega Healthcare vs. Coor Service Management | Omega Healthcare vs. URU Metals | Omega Healthcare vs. Adriatic Metals | Omega Healthcare vs. Alien Metals |
| Ross Stores vs. European Metals Holdings | Ross Stores vs. Seche Environnement SA | Ross Stores vs. Impax Environmental Markets | Ross Stores vs. URU Metals |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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