Correlation Between Outset Medical and Lifestance Health

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

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

Diversification Opportunities for Outset Medical and Lifestance Health

0.18

Correlation Coefficient

Outset Medical  Lifestance Health

Average diversification

The 3 months correlation between Outset and Lifestance is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and Lifestance Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestance Health 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 Lifestance Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifestance Health has no effect on the direction of Outset Medical i.e., Outset Medical and Lifestance Health go up and down completely randomly.

Pair Corralation between Outset Medical and Lifestance Health

Allowing for the 90-day total investment horizon Outset Medical is expected to under-perform the Lifestance Health. In addition to that, Outset Medical is 4.44 times more volatile than Lifestance Health Group. It trades about -0.04 of its total potential returns per unit of risk. Lifestance Health Group is currently generating about -0.07 per unit of volatility. If you would invest  740.00  in Lifestance Health Group on December 29, 2024 and sell it today you would lose (63.00) from holding Lifestance Health Group or give up 8.51% of portfolio value over 90 days.

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

Outset Medical  vs.  Lifestance Health 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.

Lifestance Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lifestance Health Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Outset Medical and Lifestance Health

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

The idea behind Outset Medical and Lifestance Health 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.