Correlation Between Outset Medical and Chemed Corp
Can any of the company-specific risk be diversified away by investing in both Outset Medical and Chemed Corp 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 Chemed Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Outset Medical and Chemed Corp, you can compare the effects of market volatilities on Outset Medical and Chemed Corp 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 Chemed Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outset Medical and Chemed Corp.
Diversification Opportunities for Outset Medical and Chemed Corp
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Outset and Chemed is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and Chemed Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemed Corp 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 Chemed Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemed Corp has no effect on the direction of Outset Medical i.e., Outset Medical and Chemed Corp go up and down completely randomly.
Pair Corralation between Outset Medical and Chemed Corp
Allowing for the 90-day total investment horizon Outset Medical is expected to under-perform the Chemed Corp. In addition to that, Outset Medical is 2.12 times more volatile than Chemed Corp. It trades about -0.09 of its total potential returns per unit of risk. Chemed Corp is currently generating about 0.18 per unit of volatility. If you would invest 56,149 in Chemed Corp on December 2, 2024 and sell it today you would earn a total of 3,931 from holding Chemed Corp or generate 7.0% 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. Chemed Corp
Performance |
Timeline |
Outset Medical |
Chemed Corp |
Outset Medical and Chemed Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Outset Medical and Chemed Corp
The main advantage of trading using opposite Outset Medical and Chemed Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outset Medical position performs unexpectedly, Chemed Corp 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 Chemed Corp will offset losses from the drop in Chemed Corp's long position.Outset Medical vs. Clearpoint Neuro | Outset Medical vs. Inspire Medical Systems | Outset Medical vs. Nevro Corp | Outset Medical vs. Si Bone |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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