Correlation Between Bellevue Healthcare and Omega Healthcare

Can any of the company-specific risk be diversified away by investing in both Bellevue Healthcare and Omega Healthcare 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 Bellevue Healthcare and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bellevue Healthcare Trust and Omega Healthcare Investors, you can compare the effects of market volatilities on Bellevue Healthcare and Omega Healthcare 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 Bellevue Healthcare with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bellevue Healthcare and Omega Healthcare.

Diversification Opportunities for Bellevue Healthcare and Omega Healthcare

0.12

Correlation Coefficient

Bellevue Healthcare  Omega Healthcare

Average diversification

The 3 months correlation between Bellevue and Omega is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Bellevue Healthcare Trust and Omega Healthcare Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omega Healthcare Inv and Bellevue 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 Bellevue Healthcare Trust are associated (or correlated) with Omega Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omega Healthcare Inv has no effect on the direction of Bellevue Healthcare i.e., Bellevue Healthcare and Omega Healthcare go up and down completely randomly.

Pair Corralation between Bellevue Healthcare and Omega Healthcare

Assuming the 90 days trading horizon Bellevue Healthcare Trust is expected to generate 0.9 times more return on investment than Omega Healthcare. However, Bellevue Healthcare Trust is 1.11 times less risky than Omega Healthcare. It trades about -0.06 of its potential returns per unit of risk. Omega Healthcare Investors is currently generating about -0.05 per unit of risk. If you would invest  14,600  in Bellevue Healthcare Trust on September 30, 2024 and sell it today you would lose (620.00) from holding Bellevue Healthcare Trust or give up 4.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Bellevue Healthcare Trust  vs.  Omega Healthcare Investors

Bellevue Healthcare Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bellevue Healthcare Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Bellevue Healthcare is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with Bellevue Healthcare and Omega Healthcare

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

The idea behind Bellevue Healthcare Trust and Omega Healthcare Investors 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.