Correlation Between Omega Healthcare and Mangels Industrial

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

Diversification Opportunities for Omega Healthcare and Mangels Industrial

0.1

Correlation Coefficient

Omega Healthcare  Mangels Industrial

Average diversification

The 3 months correlation between Omega and Mangels is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors, and Mangels Industrial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mangels Industrial 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 Mangels Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mangels Industrial has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Mangels Industrial go up and down completely randomly.

Pair Corralation between Omega Healthcare and Mangels Industrial

Assuming the 90 days trading horizon Omega Healthcare Investors, is expected to under-perform the Mangels Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Omega Healthcare Investors, is 3.15 times less risky than Mangels Industrial. The stock trades about -0.12 of its potential returns per unit of risk. The Mangels Industrial SA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  697.00  in Mangels Industrial SA on December 24, 2024 and sell it today you would lose (48.00) from holding Mangels Industrial SA or give up 6.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	88.14%
Values	Daily Returns

Omega Healthcare Investors,  vs.  Mangels Industrial SA

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 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.

Mangels Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mangels Industrial SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Mangels Industrial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Omega Healthcare and Mangels Industrial

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

The idea behind Omega Healthcare Investors, and Mangels Industrial SA 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.