Correlation Between Universal Health and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both Universal 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 Universal 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 Universal Health Realty and Omega Healthcare Investors, you can compare the effects of market volatilities on Universal 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 Universal Health with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and Omega Healthcare.
Diversification Opportunities for Universal Health and Omega Healthcare
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Universal and Omega is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Realty 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 Universal 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 Universal Health Realty 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 Universal Health i.e., Universal Health and Omega Healthcare go up and down completely randomly.
Pair Corralation between Universal Health and Omega Healthcare
Considering the 90-day investment horizon Universal Health Realty is expected to under-perform the Omega Healthcare. In addition to that, Universal Health is 1.15 times more volatile than Omega Healthcare Investors. It trades about -0.01 of its total potential returns per unit of risk. Omega Healthcare Investors is currently generating about 0.07 per unit of volatility. If you would invest 2,531 in Omega Healthcare Investors on August 27, 2024 and sell it today you would earn a total of 1,480 from holding Omega Healthcare Investors or generate 58.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Health Realty vs. Omega Healthcare Investors
Performance |
| Timeline |
| Universal Health Realty |
| Omega Healthcare Inv |
Universal Health and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Health and Omega Healthcare
The main advantage of trading using opposite Universal Health and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal 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.| Universal Health vs. Healthcare Realty Trust | Universal Health vs. Healthpeak Properties | Universal Health vs. Sabra Healthcare REIT | Universal Health vs. Community Healthcare Trust |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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