Correlation Between Omega Healthcare and Tyson Foods

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

Diversification Opportunities for Omega Healthcare and Tyson Foods

-0.01

Correlation Coefficient

Omega Healthcare  Tyson Foods

Good diversification

The 3 months correlation between Omega and Tyson is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors and Tyson Foods Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods Cl 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 Tyson Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tyson Foods Cl has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Tyson Foods go up and down completely randomly.

Pair Corralation between Omega Healthcare and Tyson Foods

Assuming the 90 days trading horizon Omega Healthcare Investors is expected to under-perform the Tyson Foods. But the stock apears to be less risky and, when comparing its historical volatility, Omega Healthcare Investors is 1.12 times less risky than Tyson Foods. The stock trades about -0.05 of its potential returns per unit of risk. The Tyson Foods Cl is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  5,966  in Tyson Foods Cl on September 21, 2024 and sell it today you would lose (82.00) from holding Tyson Foods Cl or give up 1.37% of portfolio value over 90 days.

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

Omega Healthcare Investors  vs.  Tyson Foods Cl

Omega Healthcare Inv

Risk-Adjusted Performance

0 of 100

Very Weak

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

Tyson Foods Cl

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Omega Healthcare and Tyson Foods

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

The idea behind Omega Healthcare Investors and Tyson Foods Cl 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .