Correlation Between Omega Healthcare and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both Omega Healthcare and UnitedHealth Group 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 UnitedHealth Group 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 UnitedHealth Group Incorporated, you can compare the effects of market volatilities on Omega Healthcare and UnitedHealth Group 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 UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Healthcare and UnitedHealth Group.
Diversification Opportunities for Omega Healthcare and UnitedHealth Group
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Omega and UnitedHealth is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors, and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth 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 UnitedHealth Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UnitedHealth Group has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and UnitedHealth Group go up and down completely randomly.
Pair Corralation between Omega Healthcare and UnitedHealth Group
Assuming the 90 days trading horizon Omega Healthcare Investors, is expected to under-perform the UnitedHealth Group. But the stock apears to be less risky and, when comparing its historical volatility, Omega Healthcare Investors, is 1.37 times less risky than UnitedHealth Group. The stock trades about -0.22 of its potential returns per unit of risk. The UnitedHealth Group Incorporated is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,448 in UnitedHealth Group Incorporated on November 3, 2024 and sell it today you would earn a total of 89.00 from holding UnitedHealth Group Incorporated or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 78.26% |
| Values | Daily Returns |
Omega Healthcare Investors, vs. UnitedHealth Group Incorporate
Performance |
| Timeline |
| Omega Healthcare Inv |
| UnitedHealth Group |
Omega Healthcare and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omega Healthcare and UnitedHealth Group
The main advantage of trading using opposite Omega Healthcare and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Healthcare position performs unexpectedly, UnitedHealth Group 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 UnitedHealth Group will offset losses from the drop in UnitedHealth Group'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 |
| UnitedHealth Group vs. Jefferies Financial Group | UnitedHealth Group vs. Nordon Indstrias Metalrgicas | UnitedHealth Group vs. Broadridge Financial Solutions, | UnitedHealth Group vs. Prudential Financial |
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 Managers module to screen money managers from public funds and ETFs managed around the world.
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