Correlation Between Realty Income and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both Realty Income 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 Realty Income and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Realty Income and Omega Healthcare Investors, you can compare the effects of market volatilities on Realty Income 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 Realty Income with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realty Income and Omega Healthcare.
Diversification Opportunities for Realty Income and Omega Healthcare
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Realty and Omega is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income 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 Realty Income 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 Realty Income 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 Realty Income i.e., Realty Income and Omega Healthcare go up and down completely randomly.
Pair Corralation between Realty Income and Omega Healthcare
Taking into account the 90-day investment horizon Realty Income is expected to generate 2.11 times less return on investment than Omega Healthcare. But when comparing it to its historical volatility, Realty Income is 1.09 times less risky than Omega Healthcare. It trades about 0.11 of its potential returns per unit of risk. Omega Healthcare Investors is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 3,008 in Omega Healthcare Investors on August 24, 2024 and sell it today you would earn a total of 1,006 from holding Omega Healthcare Investors or generate 33.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Realty Income vs. Omega Healthcare Investors
Performance |
| Timeline |
| Realty Income |
| Omega Healthcare Inv |
Realty Income and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Realty Income and Omega Healthcare
The main advantage of trading using opposite Realty Income and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Realty Income 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.| Realty Income vs. Federal Realty Investment | Realty Income vs. Macerich Company | Realty Income vs. National Retail Properties | Realty Income vs. Kimco Realty |
| Omega Healthcare vs. LTC Properties | Omega Healthcare vs. Healthpeak Properties | Omega Healthcare vs. Global Medical REIT | Omega Healthcare vs. Sabra Healthcare REIT |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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