Correlation Between Omega Healthcare and Acres Commercial

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

Diversification Opportunities for Omega Healthcare and Acres Commercial

0.07

Correlation Coefficient

Omega Healthcare  Acres Commercial

Significant diversification

The 3 months correlation between Omega and Acres is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors and Acres Commercial Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acres Commercial Realty 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 Acres Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acres Commercial Realty has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Acres Commercial go up and down completely randomly.

Pair Corralation between Omega Healthcare and Acres Commercial

Considering the 90-day investment horizon Omega Healthcare is expected to generate 2.5 times less return on investment than Acres Commercial. But when comparing it to its historical volatility, Omega Healthcare Investors is 1.2 times less risky than Acres Commercial. It trades about 0.07 of its potential returns per unit of risk. Acres Commercial Realty is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,546  in Acres Commercial Realty on September 3, 2024 and sell it today you would earn a total of  191.00  from holding Acres Commercial Realty or generate 12.35% return on investment over 90 days.

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

Omega Healthcare Investors  vs.  Acres Commercial Realty

Omega Healthcare Inv

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Omega Healthcare Investors are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Omega Healthcare is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Acres Commercial Realty

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Acres Commercial Realty are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Acres Commercial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Omega Healthcare and Acres Commercial

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

The idea behind Omega Healthcare Investors and Acres Commercial Realty 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.