Correlation Between Omega Healthcare and Annaly Capital

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

Diversification Opportunities for Omega Healthcare and Annaly Capital

0.0

Correlation Coefficient

Omega Healthcare  Annaly Capital

Pay attention - limited upside

The 3 months correlation between Omega and Annaly is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors and Annaly Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annaly Capital Management 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 Annaly Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annaly Capital Management has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Annaly Capital go up and down completely randomly.

Pair Corralation between Omega Healthcare and Annaly Capital

Considering the 90-day investment horizon Omega Healthcare is expected to generate 2.81 times less return on investment than Annaly Capital. In addition to that, Omega Healthcare is 1.31 times more volatile than Annaly Capital Management. It trades about 0.06 of its total potential returns per unit of risk. Annaly Capital Management is currently generating about 0.23 per unit of volatility. If you would invest  1,904  in Annaly Capital Management on September 3, 2024 and sell it today you would earn a total of  89.00  from holding Annaly Capital Management or generate 4.67% return on investment over 90 days.

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

Omega Healthcare Investors  vs.  Annaly Capital Management

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

Annaly Capital Management

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Annaly Capital Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Annaly Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Omega Healthcare and Annaly Capital

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

The idea behind Omega Healthcare Investors and Annaly Capital Management 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.