Correlation Between Charles Schwab and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both Charles Schwab 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 Charles Schwab and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charles Schwab Corp and Omega Healthcare Investors, you can compare the effects of market volatilities on Charles Schwab 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 Charles Schwab with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charles Schwab and Omega Healthcare.
Diversification Opportunities for Charles Schwab and Omega Healthcare
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Charles and Omega is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Charles Schwab Corp 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 Charles Schwab 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 Charles Schwab Corp 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 Charles Schwab i.e., Charles Schwab and Omega Healthcare go up and down completely randomly.
Pair Corralation between Charles Schwab and Omega Healthcare
Given the investment horizon of 90 days Charles Schwab Corp is expected to generate 1.47 times more return on investment than Omega Healthcare. However, Charles Schwab is 1.47 times more volatile than Omega Healthcare Investors. It trades about 0.1 of its potential returns per unit of risk. Omega Healthcare Investors is currently generating about 0.11 per unit of risk. If you would invest 5,500 in Charles Schwab Corp on August 24, 2024 and sell it today you would earn a total of 2,580 from holding Charles Schwab Corp or generate 46.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charles Schwab Corp vs. Omega Healthcare Investors
Performance |
| Timeline |
| Charles Schwab Corp |
| Omega Healthcare Inv |
Charles Schwab and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charles Schwab and Omega Healthcare
The main advantage of trading using opposite Charles Schwab and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charles Schwab 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.| Charles Schwab vs. Goldman Sachs Group | Charles Schwab vs. Riot Blockchain | Charles Schwab vs. Jefferies Financial Group | Charles Schwab vs. Marathon Digital Holdings |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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