Correlation Between Ebro Foods and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Omega 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 Ebro Foods and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and Omega Healthcare Investors, you can compare the effects of market volatilities on Ebro Foods and Omega 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 Ebro Foods with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Omega Healthcare.
Diversification Opportunities for Ebro Foods and Omega Healthcare
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ebro and Omega is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Omega Healthcare Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omega Healthcare Inv and Ebro Foods 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 Ebro Foods are associated (or correlated) with Omega Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omega Healthcare Inv has no effect on the direction of Ebro Foods i.e., Ebro Foods and Omega Healthcare go up and down completely randomly.
Pair Corralation between Ebro Foods and Omega Healthcare
Assuming the 90 days trading horizon Ebro Foods is expected to generate 0.58 times more return on investment than Omega Healthcare. However, Ebro Foods is 1.73 times less risky than Omega Healthcare. It trades about -0.16 of its potential returns per unit of risk. Omega Healthcare Investors is currently generating about -0.22 per unit of risk. If you would invest 1,622 in Ebro Foods on September 12, 2024 and sell it today you would lose (29.00) from holding Ebro Foods or give up 1.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods vs. Omega Healthcare Investors
Performance |
| Timeline |
| Ebro Foods |
| Omega Healthcare Inv |
Ebro Foods and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Omega Healthcare
The main advantage of trading using opposite Ebro Foods and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Omega 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 Omega Healthcare will offset losses from the drop in Omega Healthcare's long position.| Ebro Foods vs. Gaztransport et Technigaz | Ebro Foods vs. Leroy Seafood Group | Ebro Foods vs. Vienna Insurance Group | Ebro Foods vs. Sabre Insurance Group |
| Omega Healthcare vs. Hong Kong Land | Omega Healthcare vs. Neometals | Omega Healthcare vs. Coor Service Management | Omega Healthcare vs. Fidelity Sustainable USD |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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