Correlation Between Omnicell and M3

Can any of the company-specific risk be diversified away by investing in both Omnicell and M3 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 Omnicell and M3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Omnicell and M3 Inc, you can compare the effects of market volatilities on Omnicell and M3 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 Omnicell with a short position of M3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omnicell and M3.

Diversification Opportunities for Omnicell and M3

0.63

Correlation Coefficient

Omnicell  M3

Poor diversification

The 3 months correlation between Omnicell and M3 is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Omnicell and M3 Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M3 Inc and Omnicell 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 Omnicell are associated (or correlated) with M3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M3 Inc has no effect on the direction of Omnicell i.e., Omnicell and M3 go up and down completely randomly.

Pair Corralation between Omnicell and M3

Given the investment horizon of 90 days Omnicell is expected to under-perform the M3. In addition to that, Omnicell is 1.17 times more volatile than M3 Inc. It trades about -0.14 of its total potential returns per unit of risk. M3 Inc is currently generating about -0.08 per unit of volatility. If you would invest  2,360  in M3 Inc on January 24, 2024 and sell it today you would lose (900.00) from holding M3 Inc or give up 38.14% of portfolio value over 90 days.

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

Omnicell  vs.  M3 Inc

Omnicell

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Omnicell has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

M3 Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days M3 Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Omnicell and M3

The main advantage of trading using opposite Omnicell and M3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omnicell position performs unexpectedly, M3 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 M3 will offset losses from the drop in M3's long position.

The idea behind Omnicell and M3 Inc 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.