Correlation Between Omega Healthcare and Waste Management
Can any of the company-specific risk be diversified away by investing in both Omega Healthcare and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on Omega Healthcare and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Healthcare and Waste Management.
Diversification Opportunities for Omega Healthcare and Waste Management
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Omega and Waste is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors, and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Waste Management go up and down completely randomly.
Pair Corralation between Omega Healthcare and Waste Management
Assuming the 90 days trading horizon Omega Healthcare Investors, is expected to under-perform the Waste Management. In addition to that, Omega Healthcare is 1.12 times more volatile than Waste Management. It trades about -0.24 of its total potential returns per unit of risk. Waste Management is currently generating about 0.23 per unit of volatility. If you would invest 61,348 in Waste Management on November 5, 2024 and sell it today you would earn a total of 4,060 from holding Waste Management or generate 6.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 76.19% |
| Values | Daily Returns |
Omega Healthcare Investors, vs. Waste Management
Performance |
| Timeline |
| Omega Healthcare Inv |
| Waste Management |
Omega Healthcare and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omega Healthcare and Waste Management
The main advantage of trading using opposite Omega Healthcare and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Healthcare position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's 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 |
| Waste Management vs. Spotify Technology SA | Waste Management vs. Patria Investments Limited | Waste Management vs. Globus Medical, | Waste Management vs. Martin Marietta Materials, |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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