Correlation Between Volkswagen and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both Volkswagen 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 Volkswagen and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and Omega Healthcare Investors, you can compare the effects of market volatilities on Volkswagen 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 Volkswagen with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Omega Healthcare.
Diversification Opportunities for Volkswagen and Omega Healthcare
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Volkswagen and Omega is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG 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 Volkswagen 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 Volkswagen AG 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 Volkswagen i.e., Volkswagen and Omega Healthcare go up and down completely randomly.
Pair Corralation between Volkswagen and Omega Healthcare
Assuming the 90 days trading horizon Volkswagen AG is expected to generate 0.93 times more return on investment than Omega Healthcare. However, Volkswagen AG is 1.07 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 -0.19 per unit of risk. If you would invest 8,940 in Volkswagen AG on October 13, 2024 and sell it today you would earn a total of 400.00 from holding Volkswagen AG or generate 4.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Volkswagen AG vs. Omega Healthcare Investors
Performance |
| Timeline |
| Volkswagen AG |
| Omega Healthcare Inv |
Volkswagen and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Omega Healthcare
The main advantage of trading using opposite Volkswagen and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen 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.| Volkswagen vs. Atalaya Mining | Volkswagen vs. Seraphim Space Investment | Volkswagen vs. Thor Mining PLC | Volkswagen vs. Nordic Semiconductor ASA |
| Omega Healthcare vs. Walmart | Omega Healthcare vs. BYD Co | Omega Healthcare vs. Volkswagen AG | Omega Healthcare vs. Volkswagen AG Non Vtg |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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