Correlation Between Welltower and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both Welltower 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 Welltower and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Welltower and Omega Healthcare Investors, you can compare the effects of market volatilities on Welltower 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 Welltower with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Welltower and Omega Healthcare.
Diversification Opportunities for Welltower and Omega Healthcare
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Welltower and Omega is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Welltower 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 Welltower 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 Welltower 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 Welltower i.e., Welltower and Omega Healthcare go up and down completely randomly.
Pair Corralation between Welltower and Omega Healthcare
Assuming the 90 days horizon Welltower is expected to generate 0.77 times more return on investment than Omega Healthcare. However, Welltower is 1.29 times less risky than Omega Healthcare. It trades about 0.25 of its potential returns per unit of risk. Omega Healthcare Investors is currently generating about 0.18 per unit of risk. If you would invest 9,151 in Welltower on August 25, 2024 and sell it today you would earn a total of 4,079 from holding Welltower or generate 44.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.24% |
| Values | Daily Returns |
Welltower vs. Omega Healthcare Investors
Performance |
| Timeline |
| Welltower |
| Omega Healthcare Inv |
Welltower and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Welltower and Omega Healthcare
The main advantage of trading using opposite Welltower and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Welltower 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.| Welltower vs. Omega Healthcare Investors | Welltower vs. Medical Properties Trust | Welltower vs. Sabra Health Care | Welltower vs. National Health Investors |
| Omega Healthcare vs. Welltower | Omega Healthcare vs. Medical Properties Trust | Omega Healthcare vs. Sabra Health Care | Omega Healthcare vs. National Health Investors |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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