Correlation Between Outset Medical and Acadia Healthcare
Can any of the company-specific risk be diversified away by investing in both Outset Medical and Acadia Healthcare 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 Acadia Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Outset Medical and Acadia Healthcare, you can compare the effects of market volatilities on Outset Medical and Acadia Healthcare 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 Acadia Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outset Medical and Acadia Healthcare.
Diversification Opportunities for Outset Medical and Acadia Healthcare
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Outset and Acadia is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and Acadia Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Healthcare 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 Acadia Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadia Healthcare has no effect on the direction of Outset Medical i.e., Outset Medical and Acadia Healthcare go up and down completely randomly.
Pair Corralation between Outset Medical and Acadia Healthcare
Allowing for the 90-day total investment horizon Outset Medical is expected to generate 1.73 times more return on investment than Acadia Healthcare. However, Outset Medical is 1.73 times more volatile than Acadia Healthcare. It trades about 0.33 of its potential returns per unit of risk. Acadia Healthcare is currently generating about -0.24 per unit of risk. 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 Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Outset Medical vs. Acadia Healthcare
Performance |
| Timeline |
| Outset Medical |
| Acadia Healthcare |
Outset Medical and Acadia Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Outset Medical and Acadia Healthcare
The main advantage of trading using opposite Outset Medical and Acadia Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outset Medical position performs unexpectedly, Acadia Healthcare 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 Acadia Healthcare will offset losses from the drop in Acadia Healthcare's long position.| Outset Medical vs. Inari Medical | Outset Medical vs. Clearpoint Neuro | Outset Medical vs. Inspire Medical Systems | Outset Medical vs. Nevro Corp |
| Acadia Healthcare vs. Encompass Health Corp | Acadia Healthcare vs. Pennant Group | Acadia Healthcare vs. Select Medical Holdings | Acadia Healthcare vs. Addus HomeCare |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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