Correlation Between Outset Medical and EDAP TMS
Can any of the company-specific risk be diversified away by investing in both Outset Medical and EDAP TMS 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 EDAP TMS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Outset Medical and EDAP TMS SA, you can compare the effects of market volatilities on Outset Medical and EDAP TMS 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 EDAP TMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outset Medical and EDAP TMS.
Diversification Opportunities for Outset Medical and EDAP TMS
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Outset and EDAP is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and EDAP TMS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDAP TMS SA 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 EDAP TMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDAP TMS SA has no effect on the direction of Outset Medical i.e., Outset Medical and EDAP TMS go up and down completely randomly.
Pair Corralation between Outset Medical and EDAP TMS
Allowing for the 90-day total investment horizon Outset Medical is expected to under-perform the EDAP TMS. In addition to that, Outset Medical is 1.94 times more volatile than EDAP TMS SA. It trades about -0.06 of its total potential returns per unit of risk. EDAP TMS SA is currently generating about -0.07 per unit of volatility. If you would invest 1,080 in EDAP TMS SA on October 20, 2024 and sell it today you would lose (863.00) from holding EDAP TMS SA or give up 79.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Outset Medical vs. EDAP TMS SA
Performance |
| Timeline |
| Outset Medical |
| EDAP TMS SA |
Outset Medical and EDAP TMS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Outset Medical and EDAP TMS
The main advantage of trading using opposite Outset Medical and EDAP TMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outset Medical position performs unexpectedly, EDAP TMS 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 EDAP TMS will offset losses from the drop in EDAP TMS's long position.| Outset Medical vs. Inari Medical | Outset Medical vs. Clearpoint Neuro | Outset Medical vs. Inspire Medical Systems | Outset Medical vs. Nevro Corp |
| EDAP TMS vs. Patterson Companies | EDAP TMS vs. Henry Schein | EDAP TMS vs. McKesson | EDAP TMS vs. Cardinal Health |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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