Correlation Between UnitedHealth Group and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group 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 UnitedHealth Group and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UnitedHealth Group Incorporated and Omega Healthcare Investors,, you can compare the effects of market volatilities on UnitedHealth Group 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 UnitedHealth Group with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Omega Healthcare.
Diversification Opportunities for UnitedHealth Group and Omega Healthcare
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between UnitedHealth and Omega is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate 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 UnitedHealth Group 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 UnitedHealth Group Incorporated 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 UnitedHealth Group i.e., UnitedHealth Group and Omega Healthcare go up and down completely randomly.
Pair Corralation between UnitedHealth Group and Omega Healthcare
Assuming the 90 days trading horizon UnitedHealth Group is expected to generate 2.02 times less return on investment than Omega Healthcare. In addition to that, UnitedHealth Group is 1.1 times more volatile than Omega Healthcare Investors,. It trades about 0.06 of its total potential returns per unit of risk. Omega Healthcare Investors, is currently generating about 0.12 per unit of volatility. If you would invest 4,475 in Omega Healthcare Investors, on November 3, 2024 and sell it today you would earn a total of 2,868 from holding Omega Healthcare Investors, or generate 64.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.59% |
| Values | Daily Returns |
UnitedHealth Group Incorporate vs. Omega Healthcare Investors,
Performance |
| Timeline |
| UnitedHealth Group |
| Omega Healthcare Inv |
UnitedHealth Group and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and Omega Healthcare
The main advantage of trading using opposite UnitedHealth Group and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group 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.| UnitedHealth Group vs. Jefferies Financial Group | UnitedHealth Group vs. Nordon Indstrias Metalrgicas | UnitedHealth Group vs. Broadridge Financial Solutions, | UnitedHealth Group vs. Prudential Financial |
| Omega Healthcare vs. Deutsche Bank Aktiengesellschaft | Omega Healthcare vs. Darden Restaurants, | Omega Healthcare vs. Bank of America | Omega Healthcare vs. SVB Financial Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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