Correlation Between Omega Healthcare and Boston Properties

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

Diversification Opportunities for Omega Healthcare and Boston Properties

0.53

Correlation Coefficient

Omega Healthcare  Boston Properties

Very weak diversification

The 3 months correlation between Omega and Boston is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties 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 Boston Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Properties has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Boston Properties go up and down completely randomly.

Pair Corralation between Omega Healthcare and Boston Properties

Considering the 90-day investment horizon Omega Healthcare Investors is expected to under-perform the Boston Properties. In addition to that, Omega Healthcare is 1.08 times more volatile than Boston Properties. It trades about -0.03 of its total potential returns per unit of risk. Boston Properties is currently generating about 0.0 per unit of volatility. If you would invest  8,033  in Boston Properties on September 5, 2024 and sell it today you would lose (18.00) from holding Boston Properties or give up 0.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Omega Healthcare Investors  vs.  Boston Properties

Omega Healthcare Inv

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Omega Healthcare Investors are ranked lower than 1 (%) 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 latest stock price confusion, may contribute to short-horizon losses for the traders.

Boston Properties

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Properties are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Boston Properties may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Omega Healthcare and Boston Properties

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

The idea behind Omega Healthcare Investors and Boston Properties 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.