Correlation Between Outset Medical and Lantheus Holdings
Can any of the company-specific risk be diversified away by investing in both Outset Medical and Lantheus Holdings 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 Lantheus Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Outset Medical and Lantheus Holdings, you can compare the effects of market volatilities on Outset Medical and Lantheus Holdings 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 Lantheus Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outset Medical and Lantheus Holdings.
Diversification Opportunities for Outset Medical and Lantheus Holdings
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Outset and Lantheus is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and Lantheus Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lantheus Holdings 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 Lantheus Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lantheus Holdings has no effect on the direction of Outset Medical i.e., Outset Medical and Lantheus Holdings go up and down completely randomly.
Pair Corralation between Outset Medical and Lantheus Holdings
Allowing for the 90-day total investment horizon Outset Medical is expected to generate 1.35 times more return on investment than Lantheus Holdings. However, Outset Medical is 1.35 times more volatile than Lantheus Holdings. It trades about 0.31 of its potential returns per unit of risk. Lantheus Holdings is currently generating about -0.16 per unit of risk. If you would invest 53.00 in Outset Medical on August 24, 2024 and sell it today you would earn a total of 31.00 from holding Outset Medical or generate 58.49% 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. Lantheus Holdings
Performance |
| Timeline |
| Outset Medical |
| Lantheus Holdings |
Outset Medical and Lantheus Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Outset Medical and Lantheus Holdings
The main advantage of trading using opposite Outset Medical and Lantheus Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outset Medical position performs unexpectedly, Lantheus Holdings 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 Lantheus Holdings will offset losses from the drop in Lantheus Holdings' long position.| Outset Medical vs. Inari Medical | Outset Medical vs. Clearpoint Neuro | Outset Medical vs. Inspire Medical Systems | Outset Medical vs. Nevro Corp |
| Lantheus Holdings vs. Neurocrine Biosciences | Lantheus Holdings vs. Ironwood Pharmaceuticals | Lantheus Holdings vs. Alkermes Plc | Lantheus Holdings vs. Avadel Pharmaceuticals PLC |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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