Correlation Between Omega Healthcare and Datadog,

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

Diversification Opportunities for Omega Healthcare and Datadog,

0.35

Correlation Coefficient

Omega Healthcare  Datadog,

Weak diversification

The 3 months correlation between Omega and Datadog, is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors, and Datadog, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datadog, 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 Datadog,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datadog, has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Datadog, go up and down completely randomly.

Pair Corralation between Omega Healthcare and Datadog,

Assuming the 90 days trading horizon Omega Healthcare is expected to generate 4.28 times less return on investment than Datadog,. But when comparing it to its historical volatility, Omega Healthcare Investors, is 1.64 times less risky than Datadog,. It trades about 0.04 of its potential returns per unit of risk. Datadog, is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  7,224  in Datadog, on October 10, 2024 and sell it today you would earn a total of  1,378  from holding Datadog, or generate 19.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Omega Healthcare Investors,  vs.  Datadog,

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.

Datadog,

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Datadog, are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Datadog, sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Omega Healthcare and Datadog,

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

The idea behind Omega Healthcare Investors, and Datadog, 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.