Correlation Between Outset Medical and AMN Healthcare

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

By analyzing existing cross correlation between Outset Medical and AMN Healthcare Services, you can compare the effects of market volatilities on Outset Medical and AMN Healthcare 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 AMN Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outset Medical and AMN Healthcare.

Diversification Opportunities for Outset Medical and AMN Healthcare

-0.12

Correlation Coefficient

Outset Medical  AMN Healthcare

Good diversification

The 3 months correlation between Outset and AMN is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and AMN Healthcare Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMN Healthcare Services 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 AMN Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMN Healthcare Services has no effect on the direction of Outset Medical i.e., Outset Medical and AMN Healthcare go up and down completely randomly.

Pair Corralation between Outset Medical and AMN Healthcare

Allowing for the 90-day total investment horizon Outset Medical is expected to under-perform the AMN Healthcare. In addition to that, Outset Medical is 2.72 times more volatile than AMN Healthcare Services. It trades about -0.06 of its total potential returns per unit of risk. AMN Healthcare Services is currently generating about 0.0 per unit of volatility. If you would invest  2,410  in AMN Healthcare Services on December 26, 2024 and sell it today you would lose (60.00) from holding AMN Healthcare Services or give up 2.49% of portfolio value over 90 days.

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

Outset Medical  vs.  AMN Healthcare Services

Outset Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Outset Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

AMN Healthcare Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMN Healthcare Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, AMN Healthcare is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Outset Medical and AMN Healthcare

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

The idea behind Outset Medical and AMN Healthcare Services 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.