Correlation Between LTC Properties and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both LTC Properties 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 LTC Properties and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LTC Properties and Omega Healthcare Investors, you can compare the effects of market volatilities on LTC Properties 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 LTC Properties with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of LTC Properties and Omega Healthcare.
Diversification Opportunities for LTC Properties and Omega Healthcare
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LTC and Omega is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding LTC Properties 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 LTC Properties 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 LTC Properties 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 LTC Properties i.e., LTC Properties and Omega Healthcare go up and down completely randomly.
Pair Corralation between LTC Properties and Omega Healthcare
Assuming the 90 days horizon LTC Properties is expected to generate 0.85 times more return on investment than Omega Healthcare. However, LTC Properties is 1.17 times less risky than Omega Healthcare. It trades about 0.19 of its potential returns per unit of risk. Omega Healthcare Investors is currently generating about 0.09 per unit of risk. If you would invest 3,262 in LTC Properties on August 25, 2024 and sell it today you would earn a total of 414.00 from holding LTC Properties or generate 12.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.78% |
| Values | Daily Returns |
LTC Properties vs. Omega Healthcare Investors
Performance |
| Timeline |
| LTC Properties |
| Omega Healthcare Inv |
LTC Properties and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LTC Properties and Omega Healthcare
The main advantage of trading using opposite LTC Properties and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LTC Properties 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.| LTC Properties vs. Welltower | LTC Properties vs. Medical Properties Trust | LTC Properties vs. Sabra Health Care | LTC Properties 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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