Correlation Between Omega Healthcare and Carnival PLC
Can any of the company-specific risk be diversified away by investing in both Omega Healthcare and Carnival PLC 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 Carnival PLC 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 Carnival PLC, you can compare the effects of market volatilities on Omega Healthcare and Carnival PLC 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 Carnival PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Healthcare and Carnival PLC.
Diversification Opportunities for Omega Healthcare and Carnival PLC
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Omega and Carnival is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors and Carnival PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival PLC 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 Carnival PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival PLC has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Carnival PLC go up and down completely randomly.
Pair Corralation between Omega Healthcare and Carnival PLC
Assuming the 90 days trading horizon Omega Healthcare Investors is expected to under-perform the Carnival PLC. But the stock apears to be less risky and, when comparing its historical volatility, Omega Healthcare Investors is 1.1 times less risky than Carnival PLC. The stock trades about -0.04 of its potential returns per unit of risk. The Carnival PLC is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 151,800 in Carnival PLC on August 27, 2024 and sell it today you would earn a total of 27,050 from holding Carnival PLC or generate 17.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Omega Healthcare Investors vs. Carnival PLC
Performance |
| Timeline |
| Omega Healthcare Inv |
| Carnival PLC |
Omega Healthcare and Carnival PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omega Healthcare and Carnival PLC
The main advantage of trading using opposite Omega Healthcare and Carnival PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Healthcare position performs unexpectedly, Carnival PLC 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 Carnival PLC will offset losses from the drop in Carnival PLC's long position.| Omega Healthcare vs. Young Cos Brewery | Omega Healthcare vs. Vulcan Materials Co | Omega Healthcare vs. National Beverage Corp | Omega Healthcare vs. Retail Estates NV |
| Carnival PLC vs. Austevoll Seafood ASA | Carnival PLC vs. CVS Health Corp | Carnival PLC vs. Omega Healthcare Investors | Carnival PLC vs. Leroy Seafood Group |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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