Correlation Between European Metals and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both European 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 European 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 European Metals Holdings and Omega Healthcare Investors, you can compare the effects of market volatilities on European 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 European Metals with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Omega Healthcare.
Diversification Opportunities for European Metals and Omega Healthcare
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between European and Omega is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings 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 European 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 European Metals Holdings 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 European Metals i.e., European Metals and Omega Healthcare go up and down completely randomly.
Pair Corralation between European Metals and Omega Healthcare
Assuming the 90 days trading horizon European Metals Holdings is expected to generate 3.0 times more return on investment than Omega Healthcare. However, European Metals is 3.0 times more volatile than Omega Healthcare Investors. It trades about 0.22 of its potential returns per unit of risk. Omega Healthcare Investors is currently generating about -0.23 per unit of risk. If you would invest 725.00 in European Metals Holdings on October 11, 2024 and sell it today you would earn a total of 113.00 from holding European Metals Holdings or generate 15.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
European Metals Holdings vs. Omega Healthcare Investors
Performance |
| Timeline |
| European Metals Holdings |
| Omega Healthcare Inv |
European Metals and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Omega Healthcare
The main advantage of trading using opposite European Metals and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European 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.| European Metals vs. Charter Communications Cl | European Metals vs. Batm Advanced Communications | European Metals vs. Darden Restaurants | European Metals vs. Molson Coors Beverage |
| Omega Healthcare vs. Morgan Advanced Materials | Omega Healthcare vs. Gaztransport et Technigaz | Omega Healthcare vs. JB Hunt Transport | Omega Healthcare vs. EVS Broadcast Equipment |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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