Correlation Between CareTrust REIT and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both CareTrust REIT 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 CareTrust REIT and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CareTrust REIT and Omega Healthcare Investors, you can compare the effects of market volatilities on CareTrust REIT 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 CareTrust REIT with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of CareTrust REIT and Omega Healthcare.
Diversification Opportunities for CareTrust REIT and Omega Healthcare
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CareTrust and Omega is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding CareTrust REIT 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 CareTrust REIT 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 CareTrust REIT 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 CareTrust REIT i.e., CareTrust REIT and Omega Healthcare go up and down completely randomly.
Pair Corralation between CareTrust REIT and Omega Healthcare
Given the investment horizon of 90 days CareTrust REIT is expected to generate 0.99 times more return on investment than Omega Healthcare. However, CareTrust REIT is 1.01 times less risky than Omega Healthcare. It trades about 0.12 of its potential returns per unit of risk. Omega Healthcare Investors is currently generating about 0.1 per unit of risk. If you would invest 1,810 in CareTrust REIT on August 27, 2024 and sell it today you would earn a total of 1,220 from holding CareTrust REIT or generate 67.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CareTrust REIT vs. Omega Healthcare Investors
Performance |
| Timeline |
| CareTrust REIT |
| Omega Healthcare Inv |
CareTrust REIT and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CareTrust REIT and Omega Healthcare
The main advantage of trading using opposite CareTrust REIT and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CareTrust REIT 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.| CareTrust REIT vs. Global Medical REIT | CareTrust REIT vs. Universal Health Realty | CareTrust REIT vs. Healthpeak Properties | CareTrust REIT vs. Healthcare Realty Trust |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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