Correlation Between Omega Healthcare and Hollywood Bowl

Can any of the company-specific risk be diversified away by investing in both Omega Healthcare and Hollywood Bowl 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 Hollywood Bowl 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 Hollywood Bowl Group, you can compare the effects of market volatilities on Omega Healthcare and Hollywood Bowl 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 Hollywood Bowl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Healthcare and Hollywood Bowl.

Diversification Opportunities for Omega Healthcare and Hollywood Bowl

0.74

Correlation Coefficient

Omega Healthcare  Hollywood Bowl

Poor diversification

The 3 months correlation between Omega and Hollywood is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors and Hollywood Bowl Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollywood Bowl Group 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 Hollywood Bowl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hollywood Bowl Group has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Hollywood Bowl go up and down completely randomly.

Pair Corralation between Omega Healthcare and Hollywood Bowl

Assuming the 90 days trading horizon Omega Healthcare Investors is expected to generate 1.14 times more return on investment than Hollywood Bowl. However, Omega Healthcare is 1.14 times more volatile than Hollywood Bowl Group. It trades about 0.05 of its potential returns per unit of risk. Hollywood Bowl Group is currently generating about 0.02 per unit of risk. If you would invest  2,467  in Omega Healthcare Investors on October 22, 2024 and sell it today you would earn a total of  1,264  from holding Omega Healthcare Investors or generate 51.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Omega Healthcare Investors  vs.  Hollywood Bowl Group

Omega Healthcare Inv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Omega Healthcare Investors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Hollywood Bowl Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hollywood Bowl Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Omega Healthcare and Hollywood Bowl

The main advantage of trading using opposite Omega Healthcare and Hollywood Bowl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Healthcare position performs unexpectedly, Hollywood Bowl 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 Hollywood Bowl will offset losses from the drop in Hollywood Bowl's long position.

The idea behind Omega Healthcare Investors and Hollywood Bowl Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.