Correlation Between Global Medical and Omega Healthcare

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

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

Diversification Opportunities for Global Medical and Omega Healthcare

0.3

Correlation Coefficient

Global Medical  Omega Healthcare

Weak diversification

The 3 months correlation between Global and Omega is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Global Medical REIT 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 Global Medical 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 Global Medical REIT 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 Global Medical i.e., Global Medical and Omega Healthcare go up and down completely randomly.

Pair Corralation between Global Medical and Omega Healthcare

Given the investment horizon of 90 days Global Medical REIT is expected to generate 0.88 times more return on investment than Omega Healthcare. However, Global Medical REIT is 1.14 times less risky than Omega Healthcare. It trades about 0.2 of its potential returns per unit of risk. Omega Healthcare Investors is currently generating about 0.03 per unit of risk. If you would invest  735.00  in Global Medical REIT on December 28, 2024 and sell it today you would earn a total of  130.50  from holding Global Medical REIT or generate 17.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Global Medical REIT  vs.  Omega Healthcare Investors

Global Medical REIT

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Medical REIT are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Global Medical exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 Global Medical and Omega Healthcare

The main advantage of trading using opposite Global Medical and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Medical 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 Global Medical REIT 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.