Correlation Between Adriatic Metals and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both Adriatic Metals 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 Adriatic Metals and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adriatic Metals and Omega Healthcare Investors, you can compare the effects of market volatilities on Adriatic Metals 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 Adriatic Metals with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adriatic Metals and Omega Healthcare.
Diversification Opportunities for Adriatic Metals and Omega Healthcare
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Adriatic and Omega is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals 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 Adriatic Metals 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 Adriatic Metals 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 Adriatic Metals i.e., Adriatic Metals and Omega Healthcare go up and down completely randomly.
Pair Corralation between Adriatic Metals and Omega Healthcare
Assuming the 90 days trading horizon Adriatic Metals is expected to generate 1.27 times more return on investment than Omega Healthcare. However, Adriatic Metals is 1.27 times more volatile than Omega Healthcare Investors. It trades about 0.17 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 19,140 in Adriatic Metals on November 5, 2024 and sell it today you would earn a total of 1,710 from holding Adriatic Metals or generate 8.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adriatic Metals vs. Omega Healthcare Investors
Performance |
| Timeline |
| Adriatic Metals |
| Omega Healthcare Inv |
Adriatic Metals and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adriatic Metals and Omega Healthcare
The main advantage of trading using opposite Adriatic Metals and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adriatic Metals 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.| Adriatic Metals vs. Software Circle plc | Adriatic Metals vs. Bytes Technology | Adriatic Metals vs. Charter Communications Cl | Adriatic Metals vs. Allianz Technology Trust |
| Omega Healthcare vs. Made Tech Group | Omega Healthcare vs. Vitec Software Group | Omega Healthcare vs. Sartorius Stedim Biotech | Omega Healthcare vs. Raytheon Technologies Corp |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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