Correlation Between Omega Healthcare and Hitachi Construction
Can any of the company-specific risk be diversified away by investing in both Omega Healthcare and Hitachi 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 Hitachi 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 Hitachi Construction Machinery, you can compare the effects of market volatilities on Omega Healthcare and Hitachi 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 Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Healthcare and Hitachi Construction.
Diversification Opportunities for Omega Healthcare and Hitachi Construction
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Omega and Hitachi is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi 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 Hitachi Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi Construction has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Hitachi Construction go up and down completely randomly.
Pair Corralation between Omega Healthcare and Hitachi Construction
Considering the 90-day investment horizon Omega Healthcare Investors is expected to under-perform the Hitachi Construction. But the stock apears to be less risky and, when comparing its historical volatility, Omega Healthcare Investors is 1.18 times less risky than Hitachi Construction. The stock trades about -0.06 of its potential returns per unit of risk. The Hitachi Construction Machinery is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 4,330 in Hitachi Construction Machinery on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Hitachi Construction Machinery or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Omega Healthcare Investors vs. Hitachi Construction Machinery
Performance |
| Timeline |
| Omega Healthcare Inv |
| Hitachi Construction |
Omega Healthcare and Hitachi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omega Healthcare and Hitachi Construction
The main advantage of trading using opposite Omega Healthcare and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Healthcare position performs unexpectedly, Hitachi 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 Hitachi Construction will offset losses from the drop in Hitachi 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 |
| Hitachi Construction vs. Lion Electric Corp | Hitachi Construction vs. Nikola Corp | Hitachi Construction vs. Buhler Industries | Hitachi Construction vs. Toyota Industries |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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