Correlation Between Omega Healthcare and Healthpeak Properties

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

Diversification Opportunities for Omega Healthcare and Healthpeak Properties

0.71

Correlation Coefficient

Omega Healthcare  Healthpeak Properties

Poor diversification

The 3 months correlation between Omega and Healthpeak is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors, and Healthpeak Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthpeak Properties 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 Healthpeak Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthpeak Properties has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Healthpeak Properties go up and down completely randomly.

Pair Corralation between Omega Healthcare and Healthpeak Properties

Assuming the 90 days trading horizon Omega Healthcare Investors, is expected to under-perform the Healthpeak Properties. But the stock apears to be less risky and, when comparing its historical volatility, Omega Healthcare Investors, is 1.07 times less risky than Healthpeak Properties. The stock trades about -0.08 of its potential returns per unit of risk. The Healthpeak Properties is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  12,454  in Healthpeak Properties on December 27, 2024 and sell it today you would lose (802.00) from holding Healthpeak Properties or give up 6.44% of portfolio value over 90 days.

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

Omega Healthcare Investors,  vs.  Healthpeak Properties

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.

Healthpeak Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Healthpeak Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Healthpeak Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Omega Healthcare and Healthpeak Properties

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

The idea behind Omega Healthcare Investors, and Healthpeak Properties 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.