Correlation Between Omega Healthcare and TAL Education
Can any of the company-specific risk be diversified away by investing in both Omega Healthcare and TAL Education 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 TAL Education 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 TAL Education Group, you can compare the effects of market volatilities on Omega Healthcare and TAL Education 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 TAL Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Healthcare and TAL Education.
Diversification Opportunities for Omega Healthcare and TAL Education
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Omega and TAL is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors, and TAL Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAL Education Group 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 TAL Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAL Education Group has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and TAL Education go up and down completely randomly.
Pair Corralation between Omega Healthcare and TAL Education
Assuming the 90 days trading horizon Omega Healthcare Investors, is expected to generate 0.41 times more return on investment than TAL Education. However, Omega Healthcare Investors, is 2.44 times less risky than TAL Education. It trades about 0.12 of its potential returns per unit of risk. TAL Education Group is currently generating about 0.04 per unit of risk. If you would invest 4,475 in Omega Healthcare Investors, on November 3, 2024 and sell it today you would earn a total of 2,868 from holding Omega Healthcare Investors, or generate 64.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.59% |
| Values | Daily Returns |
Omega Healthcare Investors, vs. TAL Education Group
Performance |
| Timeline |
| Omega Healthcare Inv |
| TAL Education Group |
Omega Healthcare and TAL Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omega Healthcare and TAL Education
The main advantage of trading using opposite Omega Healthcare and TAL Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Healthcare position performs unexpectedly, TAL Education 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 TAL Education will offset losses from the drop in TAL Education's long position.| Omega Healthcare vs. Deutsche Bank Aktiengesellschaft | Omega Healthcare vs. Darden Restaurants, | Omega Healthcare vs. Bank of America | Omega Healthcare vs. SVB Financial Group |
| TAL Education vs. United States Steel | TAL Education vs. Burlington Stores, | TAL Education vs. Metalurgica Gerdau SA | TAL Education vs. CVS Health |
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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