Correlation Between Outset Medical and Elutia
Can any of the company-specific risk be diversified away by investing in both Outset Medical and Elutia 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 Elutia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Outset Medical and Elutia Inc, you can compare the effects of market volatilities on Outset Medical and Elutia 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 Elutia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outset Medical and Elutia.
Diversification Opportunities for Outset Medical and Elutia
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Outset and Elutia is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and Elutia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elutia Inc 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 Elutia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elutia Inc has no effect on the direction of Outset Medical i.e., Outset Medical and Elutia go up and down completely randomly.
Pair Corralation between Outset Medical and Elutia
Allowing for the 90-day total investment horizon Outset Medical is expected to under-perform the Elutia. In addition to that, Outset Medical is 1.1 times more volatile than Elutia Inc. It trades about -0.05 of its total potential returns per unit of risk. Elutia Inc is currently generating about 0.03 per unit of volatility. If you would invest 425.00 in Elutia Inc on September 20, 2024 and sell it today you would lose (47.00) from holding Elutia Inc or give up 11.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Outset Medical vs. Elutia Inc
Performance |
| Timeline |
| Outset Medical |
| Elutia Inc |
Outset Medical and Elutia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Outset Medical and Elutia
The main advantage of trading using opposite Outset Medical and Elutia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outset Medical position performs unexpectedly, Elutia 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 Elutia will offset losses from the drop in Elutia's long position.The idea behind Outset Medical and Elutia Inc 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.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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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