Correlation Between Outset Medical and MPLN Old

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

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

Diversification Opportunities for Outset Medical and MPLN Old

-0.74

Correlation Coefficient

Outset Medical  MPLN Old

Pay attention - limited upside

The 3 months correlation between Outset and MPLN is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and MPLN Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPLN Old 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 MPLN Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPLN Old has no effect on the direction of Outset Medical i.e., Outset Medical and MPLN Old go up and down completely randomly.

Pair Corralation between Outset Medical and MPLN Old

Allowing for the 90-day total investment horizon Outset Medical is expected to under-perform the MPLN Old. But the stock apears to be less risky and, when comparing its historical volatility, Outset Medical is 1.07 times less risky than MPLN Old. The stock trades about -0.04 of its potential returns per unit of risk. The MPLN Old is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,546  in MPLN Old on December 29, 2024 and sell it today you would earn a total of  769.00  from holding MPLN Old or generate 49.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	67.21%
Values	Daily Returns

Outset Medical  vs.  MPLN Old

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.

MPLN Old

Risk-Adjusted Performance

Good

Over the last 90 days MPLN Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating essential indicators, MPLN Old displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Outset Medical and MPLN Old

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

The idea behind Outset Medical and MPLN Old 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.