Correlation Between Boston Properties and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both Boston Properties 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 Boston Properties and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Properties and Omega Healthcare Investors, you can compare the effects of market volatilities on Boston Properties 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 Boston Properties with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Properties and Omega Healthcare.
Diversification Opportunities for Boston Properties and Omega Healthcare
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Boston and Omega is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties 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 Boston Properties 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 Boston Properties 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 Boston Properties i.e., Boston Properties and Omega Healthcare go up and down completely randomly.
Pair Corralation between Boston Properties and Omega Healthcare
Considering the 90-day investment horizon Boston Properties is expected to generate 2.19 times less return on investment than Omega Healthcare. In addition to that, Boston Properties is 1.59 times more volatile than Omega Healthcare Investors. It trades about 0.03 of its total potential returns per unit of risk. Omega Healthcare Investors is currently generating about 0.1 per unit of volatility. If you would invest 2,791 in Omega Healthcare Investors on November 9, 2024 and sell it today you would earn a total of 1,015 from holding Omega Healthcare Investors or generate 36.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Properties vs. Omega Healthcare Investors
Performance |
| Timeline |
| Boston Properties |
| Omega Healthcare Inv |
Boston Properties and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Properties and Omega Healthcare
The main advantage of trading using opposite Boston Properties and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Properties 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.| Boston Properties vs. SL Green Realty | Boston Properties vs. Douglas Emmett | Boston Properties vs. Kilroy Realty Corp | Boston Properties vs. Alexandria Real Estate |
| Omega Healthcare vs. LTC Properties | Omega Healthcare vs. Healthpeak Properties | Omega Healthcare vs. Global Medical REIT | Omega Healthcare vs. Sabra Healthcare REIT |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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