Correlation Between Omega Healthcare and Target Healthcare
Can any of the company-specific risk be diversified away by investing in both Omega Healthcare and Target Healthcare 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 Target Healthcare 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 Target Healthcare REIT, you can compare the effects of market volatilities on Omega Healthcare and Target Healthcare 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 Target Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Healthcare and Target Healthcare.
Diversification Opportunities for Omega Healthcare and Target Healthcare
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Omega and Target is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors and Target Healthcare REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Healthcare REIT 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 Target Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Healthcare REIT has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Target Healthcare go up and down completely randomly.
Pair Corralation between Omega Healthcare and Target Healthcare
Assuming the 90 days trading horizon Omega Healthcare Investors is expected to generate 1.09 times more return on investment than Target Healthcare. However, Omega Healthcare is 1.09 times more volatile than Target Healthcare REIT. It trades about 0.05 of its potential returns per unit of risk. Target Healthcare REIT is currently generating about 0.02 per unit of risk. If you would invest 2,443 in Omega Healthcare Investors on October 12, 2024 and sell it today you would earn a total of 1,187 from holding Omega Healthcare Investors or generate 48.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Omega Healthcare Investors vs. Target Healthcare REIT
Performance |
| Timeline |
| Omega Healthcare Inv |
| Target Healthcare REIT |
Omega Healthcare and Target Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omega Healthcare and Target Healthcare
The main advantage of trading using opposite Omega Healthcare and Target Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Healthcare position performs unexpectedly, Target Healthcare 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 Target Healthcare will offset losses from the drop in Target Healthcare's long position.| Omega Healthcare vs. Walmart | Omega Healthcare vs. BYD Co | Omega Healthcare vs. Volkswagen AG | Omega Healthcare vs. Volkswagen AG Non Vtg |
| Target Healthcare vs. Aptitude Software Group | Target Healthcare vs. Telecom Italia SpA | Target Healthcare vs. Polar Capital Technology | Target Healthcare vs. Ashtead Technology Holdings |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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