Correlation Between Outset Medical and Spine Injury

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

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

Diversification Opportunities for Outset Medical and Spine Injury

0.81

Correlation Coefficient

Outset Medical  Spine Injury

Very poor diversification

The 3 months correlation between Outset and Spine is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and Spine Injury Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spine Injury Solutions 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 Spine Injury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spine Injury Solutions has no effect on the direction of Outset Medical i.e., Outset Medical and Spine Injury go up and down completely randomly.

Pair Corralation between Outset Medical and Spine Injury

Allowing for the 90-day total investment horizon Outset Medical is expected to generate 12.03 times more return on investment than Spine Injury. However, Outset Medical is 12.03 times more volatile than Spine Injury Solutions. It trades about 0.16 of its potential returns per unit of risk. Spine Injury Solutions is currently generating about 0.08 per unit of risk. If you would invest  61.00  in Outset Medical on October 10, 2024 and sell it today you would earn a total of  49.00  from holding Outset Medical or generate 80.33% return on investment over 90 days.

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

Outset Medical  vs.  Spine Injury Solutions

Outset Medical

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Outset Medical are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Outset Medical displayed solid returns over the last few months and may actually be approaching a breakup point.

Spine Injury Solutions

Risk-Adjusted Performance

6 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Spine Injury Solutions are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Spine Injury is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Outset Medical and Spine Injury

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

The idea behind Outset Medical and Spine Injury Solutions 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.