Correlation Between Outset Medical and Masimo
Can any of the company-specific risk be diversified away by investing in both Outset Medical and Masimo 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 Masimo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Outset Medical and Masimo, you can compare the effects of market volatilities on Outset Medical and Masimo 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 Masimo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outset Medical and Masimo.
Diversification Opportunities for Outset Medical and Masimo
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Outset and Masimo is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and Masimo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masimo 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 Masimo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masimo has no effect on the direction of Outset Medical i.e., Outset Medical and Masimo go up and down completely randomly.
Pair Corralation between Outset Medical and Masimo
Allowing for the 90-day total investment horizon Outset Medical is expected to generate 3.51 times more return on investment than Masimo. However, Outset Medical is 3.51 times more volatile than Masimo. It trades about 0.09 of its potential returns per unit of risk. Masimo is currently generating about 0.22 per unit of risk. If you would invest 53.00 in Outset Medical on November 2, 2024 and sell it today you would earn a total of 28.00 from holding Outset Medical or generate 52.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Outset Medical vs. Masimo
Performance |
| Timeline |
| Outset Medical |
| Masimo |
Outset Medical and Masimo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Outset Medical and Masimo
The main advantage of trading using opposite Outset Medical and Masimo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outset Medical position performs unexpectedly, Masimo 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 Masimo will offset losses from the drop in Masimo's long position.| Outset Medical vs. Inari Medical | Outset Medical vs. Clearpoint Neuro | Outset Medical vs. Inspire Medical Systems | Outset Medical vs. Nevro Corp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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