Correlation Between Air Products and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both Air Products 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 Air Products and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products and and Omega Healthcare Investors,, you can compare the effects of market volatilities on Air Products 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 Air Products with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Omega Healthcare.
Diversification Opportunities for Air Products and Omega Healthcare
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Air and Omega is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and 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 Air Products 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 Air Products and 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 Air Products i.e., Air Products and Omega Healthcare go up and down completely randomly.
Pair Corralation between Air Products and Omega Healthcare
Assuming the 90 days trading horizon Air Products and is expected to generate 0.33 times more return on investment than Omega Healthcare. However, Air Products and is 3.06 times less risky than Omega Healthcare. It trades about 0.24 of its potential returns per unit of risk. Omega Healthcare Investors, is currently generating about -0.24 per unit of risk. If you would invest 44,850 in Air Products and on November 5, 2024 and sell it today you would earn a total of 1,050 from holding Air Products and or generate 2.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 80.0% |
| Values | Daily Returns |
Air Products and vs. Omega Healthcare Investors,
Performance |
| Timeline |
| Air Products |
| Omega Healthcare Inv |
Air Products and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Omega Healthcare
The main advantage of trading using opposite Air Products and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products 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.| Air Products vs. Medical Properties Trust, | Air Products vs. Fresenius Medical Care | Air Products vs. Global X Funds | Air Products vs. Public Storage |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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