Correlation Between Empire Metals and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both Empire Metals 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 Empire Metals and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire Metals Limited and Omega Healthcare Investors, you can compare the effects of market volatilities on Empire Metals 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 Empire Metals with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Metals and Omega Healthcare.
Diversification Opportunities for Empire Metals and Omega Healthcare
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Empire and Omega is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Empire Metals Limited 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 Empire Metals 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 Empire Metals Limited 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 Empire Metals i.e., Empire Metals and Omega Healthcare go up and down completely randomly.
Pair Corralation between Empire Metals and Omega Healthcare
Assuming the 90 days trading horizon Empire Metals Limited is expected to generate 3.02 times more return on investment than Omega Healthcare. However, Empire Metals is 3.02 times more volatile than Omega Healthcare Investors. It trades about 0.08 of its potential returns per unit of risk. Omega Healthcare Investors is currently generating about 0.05 per unit of risk. If you would invest 165.00 in Empire Metals Limited on October 28, 2024 and sell it today you would earn a total of 675.00 from holding Empire Metals Limited or generate 409.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Empire Metals Limited vs. Omega Healthcare Investors
Performance |
| Timeline |
| Empire Metals Limited |
| Omega Healthcare Inv |
Empire Metals and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire Metals and Omega Healthcare
The main advantage of trading using opposite Empire Metals and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire Metals 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.| Empire Metals vs. Givaudan SA | Empire Metals vs. Atalaya Mining | Empire Metals vs. Central Asia Metals | Empire Metals vs. Metals Exploration Plc |
| Omega Healthcare vs. Abingdon Health Plc | Omega Healthcare vs. Fevertree Drinks Plc | Omega Healthcare vs. Primary Health Properties | Omega Healthcare vs. Check Point Software |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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