Correlation Between Omega Healthcare and WIMFARM SA

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

Diversification Opportunities for Omega Healthcare and WIMFARM SA

-0.6

Correlation Coefficient

Omega Healthcare  WIMFARM SA

Excellent diversification

The 3 months correlation between Omega and WIMFARM is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors and WIMFARM SA EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIMFARM SA EO 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 WIMFARM SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIMFARM SA EO has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and WIMFARM SA go up and down completely randomly.

Pair Corralation between Omega Healthcare and WIMFARM SA

Assuming the 90 days horizon Omega Healthcare Investors is expected to under-perform the WIMFARM SA. But the stock apears to be less risky and, when comparing its historical volatility, Omega Healthcare Investors is 4.63 times less risky than WIMFARM SA. The stock trades about -0.23 of its potential returns per unit of risk. The WIMFARM SA EO is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  347.00  in WIMFARM SA EO on October 4, 2024 and sell it today you would earn a total of  37.00  from holding WIMFARM SA EO or generate 10.66% return on investment over 90 days.

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

Omega Healthcare Investors  vs.  WIMFARM SA EO

Omega Healthcare Inv

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Omega Healthcare Investors are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Omega Healthcare is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

WIMFARM SA EO

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WIMFARM SA EO are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WIMFARM SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Omega Healthcare and WIMFARM SA

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

The idea behind Omega Healthcare Investors and WIMFARM SA EO 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.