Correlation Between Omega Healthcare and Granite Construction
Can any of the company-specific risk be diversified away by investing in both Omega Healthcare and Granite Construction 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 Granite Construction 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 Granite Construction Incorporated, you can compare the effects of market volatilities on Omega Healthcare and Granite Construction 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 Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Healthcare and Granite Construction.
Diversification Opportunities for Omega Healthcare and Granite Construction
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Omega and Granite is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors and Granite Construction Incorpora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction 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 Granite Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Construction has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Granite Construction go up and down completely randomly.
Pair Corralation between Omega Healthcare and Granite Construction
Considering the 90-day investment horizon Omega Healthcare is expected to generate 2.13 times less return on investment than Granite Construction. But when comparing it to its historical volatility, Omega Healthcare Investors is 1.32 times less risky than Granite Construction. It trades about 0.08 of its potential returns per unit of risk. Granite Construction Incorporated is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,479 in Granite Construction Incorporated on August 28, 2024 and sell it today you would earn a total of 6,434 from holding Granite Construction Incorporated or generate 184.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Omega Healthcare Investors vs. Granite Construction Incorpora
Performance |
| Timeline |
| Omega Healthcare Inv |
| Granite Construction |
Omega Healthcare and Granite Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omega Healthcare and Granite Construction
The main advantage of trading using opposite Omega Healthcare and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Healthcare position performs unexpectedly, Granite Construction 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 Granite Construction will offset losses from the drop in Granite Construction's long position.| Omega Healthcare vs. LTC Properties | Omega Healthcare vs. Healthpeak Properties | Omega Healthcare vs. Global Medical REIT | Omega Healthcare vs. Sabra Healthcare REIT |
| Granite Construction vs. EMCOR Group | Granite Construction vs. Comfort Systems USA | Granite Construction vs. Primoris Services | Granite Construction vs. Construction Partners |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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