Correlation Between Capital Drilling and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both Capital Drilling 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 Capital Drilling and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Drilling and Omega Healthcare Investors, you can compare the effects of market volatilities on Capital Drilling 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 Capital Drilling with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Drilling and Omega Healthcare.
Diversification Opportunities for Capital Drilling and Omega Healthcare
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capital and Omega is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Capital Drilling 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 Capital Drilling 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 Capital Drilling 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 Capital Drilling i.e., Capital Drilling and Omega Healthcare go up and down completely randomly.
Pair Corralation between Capital Drilling and Omega Healthcare
Assuming the 90 days trading horizon Capital Drilling is expected to under-perform the Omega Healthcare. In addition to that, Capital Drilling is 1.54 times more volatile than Omega Healthcare Investors. It trades about -0.13 of its total potential returns per unit of risk. Omega Healthcare Investors is currently generating about -0.03 per unit of volatility. If you would invest 3,786 in Omega Healthcare Investors on November 5, 2024 and sell it today you would lose (57.00) from holding Omega Healthcare Investors or give up 1.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Drilling vs. Omega Healthcare Investors
Performance |
| Timeline |
| Capital Drilling |
| Omega Healthcare Inv |
Capital Drilling and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Drilling and Omega Healthcare
The main advantage of trading using opposite Capital Drilling and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Drilling 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.| Capital Drilling vs. Golden Metal Resources | Capital Drilling vs. Wheaton Precious Metals | Capital Drilling vs. Jacquet Metal Service | Capital Drilling vs. Gaztransport et Technigaz |
| 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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