Correlation Between Walmart and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both Walmart 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 Walmart and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Omega Healthcare Investors, you can compare the effects of market volatilities on Walmart 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 Walmart with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Omega Healthcare.
Diversification Opportunities for Walmart and Omega Healthcare
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Walmart and Omega is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Walmart 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 Walmart 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 Walmart 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 Walmart i.e., Walmart and Omega Healthcare go up and down completely randomly.
Pair Corralation between Walmart and Omega Healthcare
Assuming the 90 days trading horizon Walmart is expected to generate 0.05 times more return on investment than Omega Healthcare. However, Walmart is 20.59 times less risky than Omega Healthcare. It trades about 0.23 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 5,939 in Walmart on October 13, 2024 and sell it today you would earn a total of 21.00 from holding Walmart or generate 0.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Walmart vs. Omega Healthcare Investors
Performance |
| Timeline |
| Walmart |
| Omega Healthcare Inv |
Walmart and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Omega Healthcare
The main advantage of trading using opposite Walmart and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart 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.| Walmart vs. Baker Steel Resources | Walmart vs. Morgan Advanced Materials | Walmart vs. Dentsply Sirona | Walmart vs. Foresight Environmental Infrastructure |
| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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