Correlation Between Omega Healthcare and Caledonia Mining
Can any of the company-specific risk be diversified away by investing in both Omega Healthcare and Caledonia Mining 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 Caledonia Mining 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 Caledonia Mining, you can compare the effects of market volatilities on Omega Healthcare and Caledonia Mining 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 Caledonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Healthcare and Caledonia Mining.
Diversification Opportunities for Omega Healthcare and Caledonia Mining
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Omega and Caledonia is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining 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 Caledonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Mining has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Caledonia Mining go up and down completely randomly.
Pair Corralation between Omega Healthcare and Caledonia Mining
Assuming the 90 days trading horizon Omega Healthcare Investors is expected to generate 0.36 times more return on investment than Caledonia Mining. However, Omega Healthcare Investors is 2.76 times less risky than Caledonia Mining. It trades about -0.19 of its potential returns per unit of risk. Caledonia Mining is currently generating about -0.23 per unit of risk. If you would invest 4,018 in Omega Healthcare Investors on September 14, 2024 and sell it today you would lose (135.00) from holding Omega Healthcare Investors or give up 3.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Omega Healthcare Investors vs. Caledonia Mining
Performance |
| Timeline |
| Omega Healthcare Inv |
| Caledonia Mining |
Omega Healthcare and Caledonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omega Healthcare and Caledonia Mining
The main advantage of trading using opposite Omega Healthcare and Caledonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Healthcare position performs unexpectedly, Caledonia Mining 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 Caledonia Mining will offset losses from the drop in Caledonia Mining's long position.| Omega Healthcare vs. Samsung Electronics Co | Omega Healthcare vs. Samsung Electronics Co | Omega Healthcare vs. Hyundai Motor | Omega Healthcare vs. Reliance Industries Ltd |
| Caledonia Mining vs. Allianz Technology Trust | Caledonia Mining vs. HCA Healthcare | Caledonia Mining vs. Worldwide Healthcare Trust | Caledonia Mining 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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