Correlation Between Masimo and Outset Medical
Can any of the company-specific risk be diversified away by investing in both Masimo 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 Masimo and Outset Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Masimo and Outset Medical, you can compare the effects of market volatilities on Masimo 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 Masimo with a short position of Outset Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Masimo and Outset Medical.
Diversification Opportunities for Masimo and Outset Medical
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Masimo and Outset is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Masimo and Outset Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outset Medical and Masimo 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 Masimo 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 Masimo i.e., Masimo and Outset Medical go up and down completely randomly.
Pair Corralation between Masimo and Outset Medical
Given the investment horizon of 90 days Masimo is expected to generate 2.63 times less return on investment than Outset Medical. But when comparing it to its historical volatility, Masimo is 2.78 times less risky than Outset Medical. It trades about 0.35 of its potential returns per unit of risk. Outset Medical is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 55.00 in Outset Medical on August 28, 2024 and sell it today you would earn a total of 35.00 from holding Outset Medical or generate 63.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Masimo vs. Outset Medical
Performance |
| Timeline |
| Masimo |
| Outset Medical |
Masimo and Outset Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Masimo and Outset Medical
The main advantage of trading using opposite Masimo and Outset Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Masimo 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.The idea behind Masimo and Outset Medical 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.| Outset Medical vs. Inari Medical | Outset Medical vs. Clearpoint Neuro | Outset Medical vs. Inspire Medical Systems | Outset Medical vs. Nevro Corp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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