Correlation Between Ocular Therapeutix and OUTLOOK THERAPEUTICS

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

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

Diversification Opportunities for Ocular Therapeutix and OUTLOOK THERAPEUTICS

0.73

Correlation Coefficient

Ocular Therapeutix  OUTLOOK THERAPEUTICS

Poor diversification

The 3 months correlation between Ocular and OUTLOOK is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ocular Therapeutix and OUTLOOK THERAPEUTICS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OUTLOOK THERAPEUTICS INC and Ocular Therapeutix 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 Ocular Therapeutix are associated (or correlated) with OUTLOOK THERAPEUTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OUTLOOK THERAPEUTICS INC has no effect on the direction of Ocular Therapeutix i.e., Ocular Therapeutix and OUTLOOK THERAPEUTICS go up and down completely randomly.

Pair Corralation between Ocular Therapeutix and OUTLOOK THERAPEUTICS

Given the investment horizon of 90 days Ocular Therapeutix is expected to generate 0.3 times more return on investment than OUTLOOK THERAPEUTICS. However, Ocular Therapeutix is 3.35 times less risky than OUTLOOK THERAPEUTICS. It trades about -0.15 of its potential returns per unit of risk. OUTLOOK THERAPEUTICS INC is currently generating about -0.05 per unit of risk. If you would invest  1,086  in Ocular Therapeutix on October 23, 2024 and sell it today you would lose (285.00) from holding Ocular Therapeutix or give up 26.24% of portfolio value over 90 days.

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

Ocular Therapeutix  vs.  OUTLOOK THERAPEUTICS INC

Ocular Therapeutix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocular Therapeutix has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

OUTLOOK THERAPEUTICS INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OUTLOOK THERAPEUTICS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Ocular Therapeutix and OUTLOOK THERAPEUTICS

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

The idea behind Ocular Therapeutix and OUTLOOK THERAPEUTICS 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.