Correlation Between Arbor Realty and Omega Healthcare

Can any of the company-specific risk be diversified away by investing in both Arbor Realty 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 Arbor Realty and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arbor Realty Trust and Omega Healthcare Investors, you can compare the effects of market volatilities on Arbor Realty 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 Arbor Realty with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Realty and Omega Healthcare.

Diversification Opportunities for Arbor Realty and Omega Healthcare

-0.19

Correlation Coefficient

Arbor Realty  Omega Healthcare

Good diversification

The 3 months correlation between Arbor and Omega is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Realty Trust 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 Arbor Realty 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 Arbor Realty Trust 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 Arbor Realty i.e., Arbor Realty and Omega Healthcare go up and down completely randomly.

Pair Corralation between Arbor Realty and Omega Healthcare

Considering the 90-day investment horizon Arbor Realty Trust is expected to under-perform the Omega Healthcare. In addition to that, Arbor Realty is 1.41 times more volatile than Omega Healthcare Investors. It trades about -0.05 of its total potential returns per unit of risk. Omega Healthcare Investors is currently generating about 0.03 per unit of volatility. If you would invest  3,705  in Omega Healthcare Investors on December 27, 2024 and sell it today you would earn a total of  67.00  from holding Omega Healthcare Investors or generate 1.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Arbor Realty Trust  vs.  Omega Healthcare Investors

Arbor Realty Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arbor Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Omega Healthcare Inv

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Omega Healthcare Investors are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Omega Healthcare is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Arbor Realty and Omega Healthcare

The main advantage of trading using opposite Arbor Realty and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor Realty 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.

The idea behind Arbor Realty Trust and Omega Healthcare Investors 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.