Correlation Between Laboratory and Outset Medical
Can any of the company-specific risk be diversified away by investing in both Laboratory and Outset Medical 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 Laboratory and Outset Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laboratory of and Outset Medical, you can compare the effects of market volatilities on Laboratory and Outset Medical 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 Laboratory with a short position of Outset Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laboratory and Outset Medical.
Diversification Opportunities for Laboratory and Outset Medical
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Laboratory and Outset is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Laboratory of and Outset Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outset Medical and Laboratory 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 Laboratory of are associated (or correlated) with Outset Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outset Medical has no effect on the direction of Laboratory i.e., Laboratory and Outset Medical go up and down completely randomly.
Pair Corralation between Laboratory and Outset Medical
Allowing for the 90-day total investment horizon Laboratory of is expected to under-perform the Outset Medical. But the stock apears to be less risky and, when comparing its historical volatility, Laboratory of is 8.58 times less risky than Outset Medical. The stock trades about -0.24 of its potential returns per unit of risk. The Outset Medical is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 86.00 in Outset Medical on September 28, 2024 and sell it today you would earn a total of 29.00 from holding Outset Medical or generate 33.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laboratory of vs. Outset Medical
Performance |
| Timeline |
| Laboratory |
| Outset Medical |
Laboratory and Outset Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laboratory and Outset Medical
The main advantage of trading using opposite Laboratory and Outset Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laboratory position performs unexpectedly, Outset Medical 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 Outset Medical will offset losses from the drop in Outset Medical's long position.| Laboratory vs. Quest Diagnostics Incorporated | Laboratory vs. Waters | Laboratory vs. Universal Health Services | Laboratory vs. Humana Inc |
| Outset Medical vs. Cigna Corp | Outset Medical vs. Definitive Healthcare Corp | Outset Medical vs. Guardant Health | Outset Medical vs. Laboratory of |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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