Correlation Between Outset Medical and MultiPlan
Can any of the company-specific risk be diversified away by investing in both Outset Medical and MultiPlan 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 MultiPlan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Outset Medical and MultiPlan, you can compare the effects of market volatilities on Outset Medical and MultiPlan 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 MultiPlan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outset Medical and MultiPlan.
Diversification Opportunities for Outset Medical and MultiPlan
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Outset and MultiPlan is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and MultiPlan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MultiPlan 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 MultiPlan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MultiPlan has no effect on the direction of Outset Medical i.e., Outset Medical and MultiPlan go up and down completely randomly.
Pair Corralation between Outset Medical and MultiPlan
Allowing for the 90-day total investment horizon Outset Medical is expected to under-perform the MultiPlan. But the stock apears to be less risky and, when comparing its historical volatility, Outset Medical is 1.0 times less risky than MultiPlan. The stock trades about -0.06 of its potential returns per unit of risk. The MultiPlan is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 6,200 in MultiPlan on September 2, 2024 and sell it today you would lose (5,411) from holding MultiPlan or give up 87.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Outset Medical vs. MultiPlan
Performance |
| Timeline |
| Outset Medical |
| MultiPlan |
Outset Medical and MultiPlan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Outset Medical and MultiPlan
The main advantage of trading using opposite Outset Medical and MultiPlan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outset Medical position performs unexpectedly, MultiPlan 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 MultiPlan will offset losses from the drop in MultiPlan's long position.| Outset Medical vs. Inari Medical | Outset Medical vs. Clearpoint Neuro | Outset Medical vs. Inspire Medical Systems | Outset Medical vs. Nevro Corp |
| MultiPlan vs. FOXO Technologies | MultiPlan vs. Heartbeam | MultiPlan vs. EUDA Health Holdings | MultiPlan vs. Nutex 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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