Correlation Between Omega Healthcare and Great Ajax

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

Diversification Opportunities for Omega Healthcare and Great Ajax

-0.05

Correlation Coefficient

Omega Healthcare  Great Ajax

Good diversification

The 3 months correlation between Omega and Great is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors and Great Ajax Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Ajax Corp 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 Great Ajax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Ajax Corp has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Great Ajax go up and down completely randomly.

Pair Corralation between Omega Healthcare and Great Ajax

Considering the 90-day investment horizon Omega Healthcare Investors is expected to generate 0.49 times more return on investment than Great Ajax. However, Omega Healthcare Investors is 2.05 times less risky than Great Ajax. It trades about 0.08 of its potential returns per unit of risk. Great Ajax Corp is currently generating about -0.04 per unit of risk. If you would invest  2,500  in Omega Healthcare Investors on September 2, 2024 and sell it today you would earn a total of  1,561  from holding Omega Healthcare Investors or generate 62.44% return on investment over 90 days.

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

Omega Healthcare Investors  vs.  Great Ajax Corp

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 recent stock price confusion, may contribute to short-horizon losses for the traders.

Great Ajax Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great Ajax Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking indicators, Great Ajax is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Omega Healthcare and Great Ajax

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

The idea behind Omega Healthcare Investors and Great Ajax Corp 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.