Correlation Between RLJ Lodging and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both RLJ Lodging 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 RLJ Lodging and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RLJ Lodging Trust and Omega Healthcare Investors, you can compare the effects of market volatilities on RLJ Lodging 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 RLJ Lodging with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLJ Lodging and Omega Healthcare.
Diversification Opportunities for RLJ Lodging and Omega Healthcare
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RLJ and Omega is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding RLJ Lodging Trust 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 RLJ Lodging 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 RLJ Lodging Trust 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 RLJ Lodging i.e., RLJ Lodging and Omega Healthcare go up and down completely randomly.
Pair Corralation between RLJ Lodging and Omega Healthcare
Considering the 90-day investment horizon RLJ Lodging Trust is expected to under-perform the Omega Healthcare. In addition to that, RLJ Lodging is 1.19 times more volatile than Omega Healthcare Investors. It trades about -0.02 of its total potential returns per unit of risk. Omega Healthcare Investors is currently generating about 0.1 per unit of volatility. If you would invest 2,791 in Omega Healthcare Investors on November 9, 2024 and sell it today you would earn a total of 1,015 from holding Omega Healthcare Investors or generate 36.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RLJ Lodging Trust vs. Omega Healthcare Investors
Performance |
| Timeline |
| RLJ Lodging Trust |
| Omega Healthcare Inv |
RLJ Lodging and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLJ Lodging and Omega Healthcare
The main advantage of trading using opposite RLJ Lodging and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLJ Lodging 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.| RLJ Lodging vs. Sunstone Hotel Investors | RLJ Lodging vs. Pebblebrook Hotel Trust | RLJ Lodging vs. Summit Hotel Properties | RLJ Lodging vs. Ryman Hospitality Properties |
| Omega Healthcare vs. LTC Properties | Omega Healthcare vs. Healthpeak Properties | Omega Healthcare vs. Global Medical REIT | Omega Healthcare vs. Sabra Healthcare REIT |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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