Correlation Between Hess and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both Hess 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 Hess and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hess Corporation and Omega Healthcare Investors,, you can compare the effects of market volatilities on Hess 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 Hess with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hess and Omega Healthcare.
Diversification Opportunities for Hess and Omega Healthcare
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hess and Omega is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hess Corp. 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 Hess 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 Hess Corporation 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 Hess i.e., Hess and Omega Healthcare go up and down completely randomly.
Pair Corralation between Hess and Omega Healthcare
Assuming the 90 days trading horizon Hess Corporation is expected to generate 0.04 times more return on investment than Omega Healthcare. However, Hess Corporation is 26.43 times less risky than Omega Healthcare. It trades about 0.16 of its potential returns per unit of risk. Omega Healthcare Investors, is currently generating about -0.21 per unit of risk. If you would invest 37,818 in Hess Corporation on October 30, 2024 and sell it today you would earn a total of 106.00 from holding Hess Corporation or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hess Corp. vs. Omega Healthcare Investors,
Performance |
| Timeline |
| Hess |
| Omega Healthcare Inv |
Hess and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hess and Omega Healthcare
The main advantage of trading using opposite Hess and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hess 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.| Hess vs. ConocoPhillips | Hess vs. Occidental Petroleum | Hess vs. Devon Energy | Hess vs. Diamondback Energy, |
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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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