Correlation Between Omega Healthcare and Accenture Plc

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

Diversification Opportunities for Omega Healthcare and Accenture Plc

0.45

Correlation Coefficient

Omega Healthcare  Accenture Plc

Very weak diversification

The 3 months correlation between Omega and Accenture is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors, and Accenture plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accenture 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 Accenture Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accenture plc has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Accenture Plc go up and down completely randomly.

Pair Corralation between Omega Healthcare and Accenture Plc

Assuming the 90 days trading horizon Omega Healthcare Investors, is expected to under-perform the Accenture Plc. But the stock apears to be less risky and, when comparing its historical volatility, Omega Healthcare Investors, is 1.26 times less risky than Accenture Plc. The stock trades about -0.24 of its potential returns per unit of risk. The Accenture plc is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  220,362  in Accenture plc on October 10, 2024 and sell it today you would lose (3,427) from holding Accenture plc or give up 1.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Omega Healthcare Investors,  vs.  Accenture plc

Omega Healthcare Inv

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Omega Healthcare Investors, are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, Omega Healthcare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Accenture plc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Accenture plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Accenture Plc may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Omega Healthcare and Accenture Plc

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

The idea behind Omega Healthcare Investors, and Accenture 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.