Correlation Between Outset Medical and Align Technology
Can any of the company-specific risk be diversified away by investing in both Outset Medical and Align Technology 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 Align Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Outset Medical and Align Technology, you can compare the effects of market volatilities on Outset Medical and Align Technology 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 Align Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outset Medical and Align Technology.
Diversification Opportunities for Outset Medical and Align Technology
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Outset and Align is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and Align Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Align Technology 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 Align Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Align Technology has no effect on the direction of Outset Medical i.e., Outset Medical and Align Technology go up and down completely randomly.
Pair Corralation between Outset Medical and Align Technology
Allowing for the 90-day total investment horizon Outset Medical is expected to generate 2.67 times more return on investment than Align Technology. However, Outset Medical is 2.67 times more volatile than Align Technology. It trades about 0.33 of its potential returns per unit of risk. Align Technology is currently generating about 0.1 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Outset Medical vs. Align Technology
Performance |
| Timeline |
| Outset Medical |
| Align Technology |
Outset Medical and Align Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Outset Medical and Align Technology
The main advantage of trading using opposite Outset Medical and Align Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outset Medical position performs unexpectedly, Align Technology 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 Align Technology will offset losses from the drop in Align Technology's long position.| Outset Medical vs. Inari Medical | Outset Medical vs. Clearpoint Neuro | Outset Medical vs. Inspire Medical Systems | Outset Medical vs. Nevro Corp |
| Align Technology vs. Insulet | Align Technology vs. Tandem Diabetes Care | Align Technology vs. Abbott Laboratories | Align Technology vs. Stryker |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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