Correlation Between Omega Healthcare and Nufarm
Can any of the company-specific risk be diversified away by investing in both Omega Healthcare and Nufarm 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 Omega Healthcare and Nufarm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Omega Healthcare Investors and Nufarm Limited, you can compare the effects of market volatilities on Omega Healthcare and Nufarm 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 Omega Healthcare with a short position of Nufarm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Healthcare and Nufarm.
Diversification Opportunities for Omega Healthcare and Nufarm
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Omega and Nufarm is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors and Nufarm Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm Limited and Omega Healthcare 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 Omega Healthcare Investors are associated (or correlated) with Nufarm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nufarm Limited has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Nufarm go up and down completely randomly.
Pair Corralation between Omega Healthcare and Nufarm
Assuming the 90 days horizon Omega Healthcare is expected to generate 4.2 times less return on investment than Nufarm. In addition to that, Omega Healthcare is 1.06 times more volatile than Nufarm Limited. It trades about 0.05 of its total potential returns per unit of risk. Nufarm Limited is currently generating about 0.22 per unit of volatility. If you would invest 222.00 in Nufarm Limited on August 29, 2024 and sell it today you would earn a total of 22.00 from holding Nufarm Limited or generate 9.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Omega Healthcare Investors vs. Nufarm Limited
Performance |
| Timeline |
| Omega Healthcare Inv |
| Nufarm Limited |
Omega Healthcare and Nufarm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omega Healthcare and Nufarm
The main advantage of trading using opposite Omega Healthcare and Nufarm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Healthcare position performs unexpectedly, Nufarm 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 Nufarm will offset losses from the drop in Nufarm's long position.| Omega Healthcare vs. Nufarm Limited | Omega Healthcare vs. Hanison Construction Holdings | Omega Healthcare vs. Hitachi Construction Machinery | Omega Healthcare vs. Chongqing Machinery Electric |
| Nufarm vs. Superior Plus Corp | Nufarm vs. NMI Holdings | Nufarm vs. Origin Agritech | Nufarm vs. SIVERS SEMICONDUCTORS AB |
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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