Correlation Between Omega Healthcare and Universal Health
Can any of the company-specific risk be diversified away by investing in both Omega Healthcare and Universal Health 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 Universal Health 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 Universal Health Realty, you can compare the effects of market volatilities on Omega Healthcare and Universal Health 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 Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Healthcare and Universal Health.
Diversification Opportunities for Omega Healthcare and Universal Health
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Omega and Universal is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors and Universal Health Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Realty 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 Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Realty has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Universal Health go up and down completely randomly.
Pair Corralation between Omega Healthcare and Universal Health
Assuming the 90 days horizon Omega Healthcare Investors is expected to generate 0.9 times more return on investment than Universal Health. However, Omega Healthcare Investors is 1.11 times less risky than Universal Health. It trades about 0.07 of its potential returns per unit of risk. Universal Health Realty is currently generating about -0.01 per unit of risk. If you would invest 2,224 in Omega Healthcare Investors on October 23, 2024 and sell it today you would earn a total of 1,406 from holding Omega Healthcare Investors or generate 63.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Omega Healthcare Investors vs. Universal Health Realty
Performance |
| Timeline |
| Omega Healthcare Inv |
| Universal Health Realty |
Omega Healthcare and Universal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omega Healthcare and Universal Health
The main advantage of trading using opposite Omega Healthcare and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Healthcare position performs unexpectedly, Universal Health 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 Universal Health will offset losses from the drop in Universal Health's long position.| Omega Healthcare vs. Sunny Optical Technology | Omega Healthcare vs. Zijin Mining Group | Omega Healthcare vs. DXC Technology Co | Omega Healthcare vs. Casio Computer CoLtd |
| Universal Health vs. Omega Healthcare Investors | Universal Health vs. Medical Properties Trust | Universal Health vs. Sabra Health Care |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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