Correlation Between Omega Healthcare and Cairn Homes

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

Diversification Opportunities for Omega Healthcare and Cairn Homes

-0.34

Correlation Coefficient

Omega Healthcare  Cairn Homes

Very good diversification

The 3 months correlation between Omega and Cairn is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors and Cairn Homes PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairn Homes PLC 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 Cairn Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairn Homes PLC has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Cairn Homes go up and down completely randomly.

Pair Corralation between Omega Healthcare and Cairn Homes

Assuming the 90 days trading horizon Omega Healthcare Investors is expected to generate 0.93 times more return on investment than Cairn Homes. However, Omega Healthcare Investors is 1.08 times less risky than Cairn Homes. It trades about -0.08 of its potential returns per unit of risk. Cairn Homes PLC is currently generating about -0.13 per unit of risk. If you would invest  3,815  in Omega Healthcare Investors on October 25, 2024 and sell it today you would lose (108.00) from holding Omega Healthcare Investors or give up 2.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Omega Healthcare Investors  vs.  Cairn Homes PLC

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.

Cairn Homes PLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cairn Homes PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Cairn Homes is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Omega Healthcare and Cairn Homes

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

The idea behind Omega Healthcare Investors and Cairn Homes PLC 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.