Correlation Between Abingdon Health and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both Abingdon Health 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 Abingdon Health and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abingdon Health Plc and Omega Healthcare Investors, you can compare the effects of market volatilities on Abingdon Health 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 Abingdon Health with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abingdon Health and Omega Healthcare.
Diversification Opportunities for Abingdon Health and Omega Healthcare
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Abingdon and Omega is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Abingdon Health Plc 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 Abingdon Health 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 Abingdon Health Plc 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 Abingdon Health i.e., Abingdon Health and Omega Healthcare go up and down completely randomly.
Pair Corralation between Abingdon Health and Omega Healthcare
Assuming the 90 days trading horizon Abingdon Health Plc is expected to generate 2.01 times more return on investment than Omega Healthcare. However, Abingdon Health is 2.01 times more volatile than Omega Healthcare Investors. It trades about 0.03 of its potential returns per unit of risk. Omega Healthcare Investors is currently generating about -0.03 per unit of risk. If you would invest 780.00 in Abingdon Health Plc on November 6, 2024 and sell it today you would earn a total of 20.00 from holding Abingdon Health Plc or generate 2.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
Abingdon Health Plc vs. Omega Healthcare Investors
Performance |
| Timeline |
| Abingdon Health Plc |
| Omega Healthcare Inv |
Abingdon Health and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abingdon Health and Omega Healthcare
The main advantage of trading using opposite Abingdon Health and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abingdon Health 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.| Abingdon Health vs. Vitec Software Group | Abingdon Health vs. Herald Investment Trust | Abingdon Health vs. Take Two Interactive Software | Abingdon Health vs. Chrysalis Investments |
| Omega Healthcare vs. STMicroelectronics NV | Omega Healthcare vs. Rheinmetall AG | Omega Healthcare vs. Coeur Mining | Omega Healthcare vs. MTI Wireless Edge |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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