Correlation Between Edinburgh Investment and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both Edinburgh Investment 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 Edinburgh Investment and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edinburgh Investment Trust and Omega Healthcare Investors, you can compare the effects of market volatilities on Edinburgh Investment 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 Edinburgh Investment with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edinburgh Investment and Omega Healthcare.
Diversification Opportunities for Edinburgh Investment and Omega Healthcare
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Edinburgh and Omega is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Edinburgh Investment Trust 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 Edinburgh Investment 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 Edinburgh Investment Trust 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 Edinburgh Investment i.e., Edinburgh Investment and Omega Healthcare go up and down completely randomly.
Pair Corralation between Edinburgh Investment and Omega Healthcare
Assuming the 90 days trading horizon Edinburgh Investment Trust is expected to generate 0.51 times more return on investment than Omega Healthcare. However, Edinburgh Investment Trust is 1.95 times less risky than Omega Healthcare. It trades about 0.15 of its potential returns per unit of risk. Omega Healthcare Investors is currently generating about -0.08 per unit of risk. If you would invest 74,200 in Edinburgh Investment Trust on October 25, 2024 and sell it today you would earn a total of 1,700 from holding Edinburgh Investment Trust or generate 2.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Edinburgh Investment Trust vs. Omega Healthcare Investors
Performance |
| Timeline |
| Edinburgh Investment |
| Omega Healthcare Inv |
Edinburgh Investment and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edinburgh Investment and Omega Healthcare
The main advantage of trading using opposite Edinburgh Investment and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edinburgh Investment 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.| Edinburgh Investment vs. Indutrade AB | Edinburgh Investment vs. Lindsell Train Investment | Edinburgh Investment vs. Various Eateries PLC | Edinburgh Investment vs. Norman Broadbent Plc |
| Omega Healthcare vs. Edinburgh Investment Trust | Omega Healthcare vs. Canadian General Investments | Omega Healthcare vs. Rheinmetall AG | Omega Healthcare vs. Air Products Chemicals |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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