Correlation Between Omega Healthcare and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both Omega Healthcare and HSBC Holdings 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 Omega Healthcare and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Omega Healthcare Investors, and HSBC Holdings plc, you can compare the effects of market volatilities on Omega Healthcare and HSBC Holdings 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 Omega Healthcare with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Healthcare and HSBC Holdings.
Diversification Opportunities for Omega Healthcare and HSBC Holdings
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Omega and HSBC is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors, and HSBC Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC Holdings plc and Omega Healthcare 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 Omega Healthcare Investors, are associated (or correlated) with HSBC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC Holdings plc has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and HSBC Holdings go up and down completely randomly.
Pair Corralation between Omega Healthcare and HSBC Holdings
Assuming the 90 days trading horizon Omega Healthcare Investors, is expected to under-perform the HSBC Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Omega Healthcare Investors, is 1.17 times less risky than HSBC Holdings. The stock trades about -0.24 of its potential returns per unit of risk. The HSBC Holdings plc is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 7,550 in HSBC Holdings plc on November 5, 2024 and sell it today you would lose (97.00) from holding HSBC Holdings plc or give up 1.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.19% |
| Values | Daily Returns |
Omega Healthcare Investors, vs. HSBC Holdings plc
Performance |
| Timeline |
| Omega Healthcare Inv |
| HSBC Holdings plc |
Omega Healthcare and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omega Healthcare and HSBC Holdings
The main advantage of trading using opposite Omega Healthcare and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Healthcare position performs unexpectedly, HSBC Holdings 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 HSBC Holdings will offset losses from the drop in HSBC Holdings' long position.| Omega Healthcare vs. KB Financial Group | Omega Healthcare vs. MAHLE Metal Leve | Omega Healthcare vs. Prudential Financial | Omega Healthcare vs. Nordon Indstrias Metalrgicas |
| HSBC Holdings vs. The Trade Desk | HSBC Holdings vs. salesforce inc | HSBC Holdings vs. Marfrig Global Foods | HSBC Holdings vs. Beyond Meat |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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