Correlation Between BT Group and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both BT Group 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 BT Group and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BT Group Plc and Omega Healthcare Investors, you can compare the effects of market volatilities on BT Group 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 BT Group with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of BT Group and Omega Healthcare.
Diversification Opportunities for BT Group and Omega Healthcare
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BT-A and Omega is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding BT Group 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 BT Group 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 BT Group 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 BT Group i.e., BT Group and Omega Healthcare go up and down completely randomly.
Pair Corralation between BT Group and Omega Healthcare
Assuming the 90 days trading horizon BT Group Plc is expected to generate 1.66 times more return on investment than Omega Healthcare. However, BT Group is 1.66 times more volatile than Omega Healthcare Investors. It trades about 0.28 of its potential returns per unit of risk. Omega Healthcare Investors is currently generating about -0.28 per unit of risk. If you would invest 13,785 in BT Group Plc on September 13, 2024 and sell it today you would earn a total of 1,415 from holding BT Group Plc or generate 10.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
BT Group Plc vs. Omega Healthcare Investors
Performance |
| Timeline |
| BT Group Plc |
| Omega Healthcare Inv |
BT Group and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BT Group and Omega Healthcare
The main advantage of trading using opposite BT Group and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BT Group 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.| BT Group vs. Monster Beverage Corp | BT Group vs. BW Offshore | BT Group vs. Discover Financial Services | BT Group vs. Sydbank |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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