Correlation Between Outset Medical and Addus HomeCare
Can any of the company-specific risk be diversified away by investing in both Outset Medical and Addus HomeCare 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 Outset Medical and Addus HomeCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Outset Medical and Addus HomeCare, you can compare the effects of market volatilities on Outset Medical and Addus HomeCare 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 Outset Medical with a short position of Addus HomeCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outset Medical and Addus HomeCare.
Diversification Opportunities for Outset Medical and Addus HomeCare
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Outset and Addus is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare and Outset Medical 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 Outset Medical are associated (or correlated) with Addus HomeCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addus HomeCare has no effect on the direction of Outset Medical i.e., Outset Medical and Addus HomeCare go up and down completely randomly.
Pair Corralation between Outset Medical and Addus HomeCare
Allowing for the 90-day total investment horizon Outset Medical is expected to generate 4.91 times more return on investment than Addus HomeCare. However, Outset Medical is 4.91 times more volatile than Addus HomeCare. It trades about 0.2 of its potential returns per unit of risk. Addus HomeCare is currently generating about 0.17 per unit of risk. If you would invest 90.00 in Outset Medical on September 24, 2024 and sell it today you would earn a total of 28.00 from holding Outset Medical or generate 31.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Outset Medical vs. Addus HomeCare
Performance |
Timeline |
Outset Medical |
Addus HomeCare |
Outset Medical and Addus HomeCare Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Outset Medical and Addus HomeCare
The main advantage of trading using opposite Outset Medical and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outset Medical position performs unexpectedly, Addus HomeCare 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 Addus HomeCare will offset losses from the drop in Addus HomeCare's long position.Outset Medical vs. Cigna Corp | Outset Medical vs. Definitive Healthcare Corp | Outset Medical vs. Guardant Health | Outset Medical vs. Laboratory of |
Addus HomeCare vs. Cigna Corp | Addus HomeCare vs. Definitive Healthcare Corp | Addus HomeCare vs. Edwards Lifesciences Corp | Addus HomeCare vs. Outset Medical |
Check out your portfolio center.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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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