Correlation Between Guidewire Software, and Omega Healthcare

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

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

Diversification Opportunities for Guidewire Software, and Omega Healthcare

-0.27

Correlation Coefficient

Guidewire Software,  Omega Healthcare

Very good diversification

The 3 months correlation between Guidewire and Omega is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Guidewire Software, 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 Guidewire Software, 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 Guidewire Software, 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 Guidewire Software, i.e., Guidewire Software, and Omega Healthcare go up and down completely randomly.

Pair Corralation between Guidewire Software, and Omega Healthcare

Assuming the 90 days trading horizon Guidewire Software, is expected to generate 1.04 times more return on investment than Omega Healthcare. However, Guidewire Software, is 1.04 times more volatile than Omega Healthcare Investors,. It trades about 0.11 of its potential returns per unit of risk. Omega Healthcare Investors, is currently generating about -0.08 per unit of risk. If you would invest  9,005  in Guidewire Software, on December 26, 2024 and sell it today you would earn a total of  736.00  from holding Guidewire Software, or generate 8.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	83.33%
Values	Daily Returns

Guidewire Software,  vs.  Omega Healthcare Investors,

Guidewire Software,

Risk-Adjusted Performance

OK

Over the last 90 days Guidewire Software, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Guidewire Software, may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Omega Healthcare Inv

Risk-Adjusted Performance

Very Weak

Over the last 90 days Omega Healthcare Investors, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Guidewire Software, and Omega Healthcare

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

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.