Correlation Between CATLIN GROUP and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both CATLIN 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 CATLIN 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 CATLIN GROUP and Omega Healthcare Investors, you can compare the effects of market volatilities on CATLIN 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 CATLIN GROUP with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATLIN GROUP and Omega Healthcare.
Diversification Opportunities for CATLIN GROUP and Omega Healthcare
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CATLIN and Omega is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding CATLIN GROUP 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 CATLIN 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 CATLIN GROUP 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 CATLIN GROUP i.e., CATLIN GROUP and Omega Healthcare go up and down completely randomly.
Pair Corralation between CATLIN GROUP and Omega Healthcare
Assuming the 90 days trading horizon CATLIN GROUP is expected to generate 1.91 times less return on investment than Omega Healthcare. But when comparing it to its historical volatility, CATLIN GROUP is 1.4 times less risky than Omega Healthcare. It trades about 0.04 of its potential returns per unit of risk. Omega Healthcare Investors is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,478 in Omega Healthcare Investors on September 3, 2024 and sell it today you would earn a total of 1,594 from holding Omega Healthcare Investors or generate 64.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
CATLIN GROUP vs. Omega Healthcare Investors
Performance |
| Timeline |
| CATLIN GROUP |
| Omega Healthcare Inv |
CATLIN GROUP and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATLIN GROUP and Omega Healthcare
The main advantage of trading using opposite CATLIN GROUP and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATLIN 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.| CATLIN GROUP vs. Molson Coors Beverage | CATLIN GROUP vs. Flowtech Fluidpower plc | CATLIN GROUP vs. CleanTech Lithium plc | CATLIN GROUP vs. Monster Beverage Corp |
| Omega Healthcare vs. Catalyst Media Group | Omega Healthcare vs. CATLIN GROUP | Omega Healthcare vs. Magnora ASA | Omega Healthcare vs. RTW Venture Fund |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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