Correlation Between Outset Medical and Ensign

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

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

Diversification Opportunities for Outset Medical and Ensign

0.21

Correlation Coefficient

Outset Medical  Ensign

Modest diversification

The 3 months correlation between Outset and Ensign is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and The Ensign Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ensign Group 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 Ensign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ensign Group has no effect on the direction of Outset Medical i.e., Outset Medical and Ensign go up and down completely randomly.

Pair Corralation between Outset Medical and Ensign

Allowing for the 90-day total investment horizon Outset Medical is expected to under-perform the Ensign. In addition to that, Outset Medical is 4.09 times more volatile than The Ensign Group. It trades about -0.04 of its total potential returns per unit of risk. The Ensign Group is currently generating about -0.02 per unit of volatility. If you would invest  13,272  in The Ensign Group on December 28, 2024 and sell it today you would lose (428.00) from holding The Ensign Group or give up 3.22% of portfolio value over 90 days.

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

Outset Medical  vs.  The Ensign Group

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.

Ensign Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Ensign Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ensign is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Outset Medical and Ensign

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

The idea behind Outset Medical and The Ensign Group 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.