Correlation Between Future Metals and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both Future 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 Future 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 Future Metals NL and Omega Healthcare Investors, you can compare the effects of market volatilities on Future 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 Future Metals with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Future Metals and Omega Healthcare.
Diversification Opportunities for Future Metals and Omega Healthcare
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Future and Omega is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Future Metals NL 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 Future 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 Future Metals NL 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 Future Metals i.e., Future Metals and Omega Healthcare go up and down completely randomly.
Pair Corralation between Future Metals and Omega Healthcare
Assuming the 90 days trading horizon Future Metals NL is expected to under-perform the Omega Healthcare. In addition to that, Future Metals is 2.42 times more volatile than Omega Healthcare Investors. It trades about -0.07 of its total potential returns per unit of risk. Omega Healthcare Investors is currently generating about 0.05 per unit of volatility. If you would invest 2,443 in Omega Healthcare Investors on October 12, 2024 and sell it today you would earn a total of 1,187 from holding Omega Healthcare Investors or generate 48.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Future Metals NL vs. Omega Healthcare Investors
Performance |
| Timeline |
| Future Metals NL |
| Omega Healthcare Inv |
Future Metals and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Future Metals and Omega Healthcare
The main advantage of trading using opposite Future Metals and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Future 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.| Future Metals vs. Polar Capital Technology | Future Metals vs. Bankers Investment Trust | Future Metals vs. Cognizant Technology Solutions | Future Metals vs. Auction Technology Group |
| Omega Healthcare vs. Walmart | Omega Healthcare vs. BYD Co | Omega Healthcare vs. Volkswagen AG | Omega Healthcare vs. Volkswagen AG Non Vtg |
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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