Correlation Between Omega Healthcare and Auto Trader
Can any of the company-specific risk be diversified away by investing in both Omega Healthcare and Auto Trader 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 Auto Trader 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 Auto Trader Group, you can compare the effects of market volatilities on Omega Healthcare and Auto Trader 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 Auto Trader. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Healthcare and Auto Trader.
Diversification Opportunities for Omega Healthcare and Auto Trader
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Omega and Auto is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors and Auto Trader Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auto Trader Group 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 Auto Trader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auto Trader Group has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Auto Trader go up and down completely randomly.
Pair Corralation between Omega Healthcare and Auto Trader
Assuming the 90 days trading horizon Omega Healthcare Investors is expected to generate 0.94 times more return on investment than Auto Trader. However, Omega Healthcare Investors is 1.06 times less risky than Auto Trader. It trades about 0.06 of its potential returns per unit of risk. Auto Trader Group is currently generating about -0.03 per unit of risk. If you would invest 3,899 in Omega Healthcare Investors on September 3, 2024 and sell it today you would earn a total of 173.00 from holding Omega Healthcare Investors or generate 4.44% 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. Auto Trader Group
Performance |
| Timeline |
| Omega Healthcare Inv |
| Auto Trader Group |
Omega Healthcare and Auto Trader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omega Healthcare and Auto Trader
The main advantage of trading using opposite Omega Healthcare and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Healthcare position performs unexpectedly, Auto Trader 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 Auto Trader will offset losses from the drop in Auto Trader's long position.| Omega Healthcare vs. Catalyst Media Group | Omega Healthcare vs. CATLIN GROUP | Omega Healthcare vs. Magnora ASA | Omega Healthcare vs. RTW Venture Fund |
| Auto Trader vs. Applied Materials | Auto Trader vs. Evolution Gaming Group | Auto Trader vs. Air Products Chemicals | Auto Trader vs. Omega Healthcare Investors |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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