Correlation Between Westinghouse Air and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air 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 Westinghouse Air and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westinghouse Air Brake and Omega Healthcare Investors,, you can compare the effects of market volatilities on Westinghouse Air 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 Westinghouse Air with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Omega Healthcare.
Diversification Opportunities for Westinghouse Air and Omega Healthcare
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Westinghouse and Omega is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake 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 Westinghouse Air 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 Westinghouse Air Brake 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 Westinghouse Air i.e., Westinghouse Air and Omega Healthcare go up and down completely randomly.
Pair Corralation between Westinghouse Air and Omega Healthcare
Assuming the 90 days trading horizon Westinghouse Air Brake is expected to generate 0.77 times more return on investment than Omega Healthcare. However, Westinghouse Air Brake is 1.3 times less risky than Omega Healthcare. It trades about 0.18 of its potential returns per unit of risk. Omega Healthcare Investors, is currently generating about 0.12 per unit of risk. If you would invest 33,838 in Westinghouse Air Brake on November 3, 2024 and sell it today you would earn a total of 26,601 from holding Westinghouse Air Brake or generate 78.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.38% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Omega Healthcare Investors,
Performance |
| Timeline |
| Westinghouse Air Brake |
| Omega Healthcare Inv |
Westinghouse Air and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Omega Healthcare
The main advantage of trading using opposite Westinghouse Air and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air 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.| Westinghouse Air vs. Take Two Interactive Software | Westinghouse Air vs. Burlington Stores, | Westinghouse Air vs. Medical Properties Trust, | Westinghouse Air vs. United Natural Foods, |
| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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