Correlation Between Omega Healthcare and Automatic Data

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

Diversification Opportunities for Omega Healthcare and Automatic Data

OmegaAutomaticDiversified AwayOmegaAutomaticDiversified Away100%
0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between Omega and Automatic is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors, and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing 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 Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Automatic Data go up and down completely randomly.

Pair Corralation between Omega Healthcare and Automatic Data

Assuming the 90 days trading horizon Omega Healthcare Investors, is expected to under-perform the Automatic Data. In addition to that, Omega Healthcare is 1.44 times more volatile than Automatic Data Processing. It trades about -0.11 of its total potential returns per unit of risk. Automatic Data Processing is currently generating about 0.1 per unit of volatility. If you would invest  6,902  in Automatic Data Processing on October 31, 2024 and sell it today you would earn a total of  483.00  from holding Automatic Data Processing or generate 7.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy98.25%
ValuesDaily Returns

Omega Healthcare Investors,  vs.  Automatic Data Processing

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 0510
JavaScript chart by amCharts 3.21.15O2HI34 ADPR34
       Timeline  
Omega Healthcare Inv 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 weak 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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan747678808284
Automatic Data Processing 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Data Processing are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Automatic Data may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan70727476

Omega Healthcare and Automatic Data Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.86-2.14-1.43-0.71-0.01170.691.392.12.8 0.050.100.150.200.25
JavaScript chart by amCharts 3.21.15O2HI34 ADPR34
       Returns  

Pair Trading with Omega Healthcare and Automatic Data

The main advantage of trading using opposite Omega Healthcare and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Healthcare position performs unexpectedly, Automatic Data 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 Automatic Data will offset losses from the drop in Automatic Data's long position.
The idea behind Omega Healthcare Investors, and Automatic Data Processing 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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