Correlation Between National Health and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both National Health 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 National Health and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Health Investors and Omega Healthcare Investors, you can compare the effects of market volatilities on National Health 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 National Health with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and Omega Healthcare.
Diversification Opportunities for National Health and Omega Healthcare
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Omega is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors 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 National Health 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 National Health Investors 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 National Health i.e., National Health and Omega Healthcare go up and down completely randomly.
Pair Corralation between National Health and Omega Healthcare
Considering the 90-day investment horizon National Health Investors is expected to generate 1.01 times more return on investment than Omega Healthcare. However, National Health is 1.01 times more volatile than Omega Healthcare Investors. It trades about 0.06 of its potential returns per unit of risk. Omega Healthcare Investors is currently generating about -0.05 per unit of risk. If you would invest 7,647 in National Health Investors on August 24, 2024 and sell it today you would earn a total of 140.00 from holding National Health Investors or generate 1.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Investors vs. Omega Healthcare Investors
Performance |
| Timeline |
| National Health Investors |
| Omega Healthcare Inv |
National Health and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and Omega Healthcare
The main advantage of trading using opposite National Health and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health 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.| National Health vs. Global Medical REIT | National Health vs. Healthpeak Properties | National Health vs. Ventas Inc | National Health vs. Omega Healthcare Investors |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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