Correlation Between Outset Medical and LivaNova PLC
Can any of the company-specific risk be diversified away by investing in both Outset Medical and LivaNova PLC 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 LivaNova PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Outset Medical and LivaNova PLC, you can compare the effects of market volatilities on Outset Medical and LivaNova PLC 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 LivaNova PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outset Medical and LivaNova PLC.
Diversification Opportunities for Outset Medical and LivaNova PLC
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Outset and LivaNova is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and LivaNova PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LivaNova PLC 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 LivaNova PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LivaNova PLC has no effect on the direction of Outset Medical i.e., Outset Medical and LivaNova PLC go up and down completely randomly.
Pair Corralation between Outset Medical and LivaNova PLC
Allowing for the 90-day total investment horizon Outset Medical is expected to under-perform the LivaNova PLC. In addition to that, Outset Medical is 6.43 times more volatile than LivaNova PLC. It trades about -0.22 of its total potential returns per unit of risk. LivaNova PLC is currently generating about 0.13 per unit of volatility. If you would invest 4,699 in LivaNova PLC on October 22, 2024 and sell it today you would earn a total of 131.00 from holding LivaNova PLC or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Outset Medical vs. LivaNova PLC
Performance |
| Timeline |
| Outset Medical |
| LivaNova PLC |
Outset Medical and LivaNova PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Outset Medical and LivaNova PLC
The main advantage of trading using opposite Outset Medical and LivaNova PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outset Medical position performs unexpectedly, LivaNova PLC 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 LivaNova PLC will offset losses from the drop in LivaNova PLC's long position.| Outset Medical vs. Inari Medical | Outset Medical vs. Clearpoint Neuro | Outset Medical vs. Inspire Medical Systems | Outset Medical vs. Nevro Corp |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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