Correlation Between Primary Health and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both Primary Health and Omega Healthcare 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 Primary Health and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Primary Health Properties and Omega Healthcare Investors, you can compare the effects of market volatilities on Primary Health and Omega Healthcare 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 Primary Health with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primary Health and Omega Healthcare.
Diversification Opportunities for Primary Health and Omega Healthcare
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Primary and Omega is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Primary Health Properties and Omega Healthcare Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omega Healthcare Inv and Primary Health 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 Primary Health Properties are associated (or correlated) with Omega Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omega Healthcare Inv has no effect on the direction of Primary Health i.e., Primary Health and Omega Healthcare go up and down completely randomly.
Pair Corralation between Primary Health and Omega Healthcare
Assuming the 90 days trading horizon Primary Health Properties is expected to generate 0.59 times more return on investment than Omega Healthcare. However, Primary Health Properties is 1.68 times less risky than Omega Healthcare. It trades about -0.04 of its potential returns per unit of risk. Omega Healthcare Investors is currently generating about -0.06 per unit of risk. If you would invest 9,640 in Primary Health Properties on August 31, 2024 and sell it today you would lose (105.00) from holding Primary Health Properties or give up 1.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Primary Health Properties vs. Omega Healthcare Investors
Performance |
| Timeline |
| Primary Health Properties |
| Omega Healthcare Inv |
Primary Health and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Primary Health and Omega Healthcare
The main advantage of trading using opposite Primary Health and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primary Health position performs unexpectedly, Omega Healthcare 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 Omega Healthcare will offset losses from the drop in Omega Healthcare's long position.| Primary Health vs. Supermarket Income REIT | Primary Health vs. Lendinvest PLC | Primary Health vs. Neometals | Primary Health vs. Coor Service Management |
| Omega Healthcare vs. Neometals | Omega Healthcare vs. Coor Service Management | Omega Healthcare vs. Aeorema Communications Plc | Omega Healthcare vs. JLEN Environmental Assets |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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