Correlation Between Omega Healthcare and Worldwide Healthcare
Can any of the company-specific risk be diversified away by investing in both Omega Healthcare and Worldwide 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 Worldwide 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 Worldwide Healthcare Trust, you can compare the effects of market volatilities on Omega Healthcare and Worldwide 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 Worldwide Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Healthcare and Worldwide Healthcare.
Diversification Opportunities for Omega Healthcare and Worldwide Healthcare
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Omega and Worldwide is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors and Worldwide Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldwide Healthcare 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 Worldwide Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldwide Healthcare has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Worldwide Healthcare go up and down completely randomly.
Pair Corralation between Omega Healthcare and Worldwide Healthcare
Assuming the 90 days trading horizon Omega Healthcare Investors is expected to generate 1.57 times more return on investment than Worldwide Healthcare. However, Omega Healthcare is 1.57 times more volatile than Worldwide Healthcare Trust. It trades about 0.16 of its potential returns per unit of risk. Worldwide Healthcare Trust is currently generating about -0.04 per unit of risk. If you would invest 3,121 in Omega Healthcare Investors on August 30, 2024 and sell it today you would earn a total of 965.00 from holding Omega Healthcare Investors or generate 30.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Omega Healthcare Investors vs. Worldwide Healthcare Trust
Performance |
| Timeline |
| Omega Healthcare Inv |
| Worldwide Healthcare |
Omega Healthcare and Worldwide Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omega Healthcare and Worldwide Healthcare
The main advantage of trading using opposite Omega Healthcare and Worldwide Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Healthcare position performs unexpectedly, Worldwide 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 Worldwide Healthcare will offset losses from the drop in Worldwide Healthcare's long position.| Omega Healthcare vs. Tungsten West PLC | Omega Healthcare vs. Argo Group Limited | Omega Healthcare vs. Hardide PLC | Omega Healthcare vs. Versarien PLC |
| Worldwide Healthcare vs. Samsung Electronics Co | Worldwide Healthcare vs. Samsung Electronics Co | Worldwide Healthcare vs. Hyundai Motor | Worldwide Healthcare vs. Toyota Motor Corp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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