Correlation Between Outset Medical and Select Medical
Can any of the company-specific risk be diversified away by investing in both Outset Medical and Select Medical 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 Select Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Outset Medical and Select Medical Holdings, you can compare the effects of market volatilities on Outset Medical and Select Medical 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 Select Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outset Medical and Select Medical.
Diversification Opportunities for Outset Medical and Select Medical
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Outset and Select is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and Select Medical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Medical 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 Select Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Medical Holdings has no effect on the direction of Outset Medical i.e., Outset Medical and Select Medical go up and down completely randomly.
Pair Corralation between Outset Medical and Select Medical
Allowing for the 90-day total investment horizon Outset Medical is expected to generate 2.35 times more return on investment than Select Medical. However, Outset Medical is 2.35 times more volatile than Select Medical Holdings. It trades about 0.31 of its potential returns per unit of risk. Select Medical Holdings is currently generating about 0.26 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Outset Medical vs. Select Medical Holdings
Performance |
| Timeline |
| Outset Medical |
| Select Medical Holdings |
Outset Medical and Select Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Outset Medical and Select Medical
The main advantage of trading using opposite Outset Medical and Select Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outset Medical position performs unexpectedly, Select Medical 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 Select Medical will offset losses from the drop in Select Medical's long position.| Outset Medical vs. Inari Medical | Outset Medical vs. Clearpoint Neuro | Outset Medical vs. Inspire Medical Systems | Outset Medical vs. Nevro Corp |
| Select Medical vs. The Ensign Group | Select Medical vs. Encompass Health Corp | Select Medical vs. InnovAge Holding Corp | Select Medical vs. Enhabit |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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