Correlation Between Omega Healthcare and Optima Health
Can any of the company-specific risk be diversified away by investing in both Omega Healthcare and Optima Health 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 Optima Health 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 Optima Health plc, you can compare the effects of market volatilities on Omega Healthcare and Optima Health 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 Optima Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Healthcare and Optima Health.
Diversification Opportunities for Omega Healthcare and Optima Health
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Omega and Optima is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors and Optima Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optima Health 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 Optima Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optima Health plc has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Optima Health go up and down completely randomly.
Pair Corralation between Omega Healthcare and Optima Health
Assuming the 90 days trading horizon Omega Healthcare Investors is expected to generate 1.0 times more return on investment than Optima Health. However, Omega Healthcare Investors is 1.0 times less risky than Optima Health. It trades about 0.11 of its potential returns per unit of risk. Optima Health plc is currently generating about 0.05 per unit of risk. If you would invest 2,861 in Omega Healthcare Investors on August 31, 2024 and sell it today you would earn a total of 1,219 from holding Omega Healthcare Investors or generate 42.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 18.4% |
| Values | Daily Returns |
Omega Healthcare Investors vs. Optima Health plc
Performance |
| Timeline |
| Omega Healthcare Inv |
| Optima Health plc |
Omega Healthcare and Optima Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omega Healthcare and Optima Health
The main advantage of trading using opposite Omega Healthcare and Optima Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Healthcare position performs unexpectedly, Optima Health 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 Optima Health will offset losses from the drop in Optima Health's long position.| Omega Healthcare vs. Neometals | Omega Healthcare vs. Coor Service Management | Omega Healthcare vs. Aeorema Communications Plc | Omega Healthcare vs. JLEN Environmental Assets |
| Optima Health vs. Flow Traders NV | Optima Health vs. Impax Environmental Markets | Optima Health vs. Veolia Environnement VE | Optima Health vs. Indutrade AB |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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