Correlation Between Outset Medical and Universal Health
Can any of the company-specific risk be diversified away by investing in both Outset Medical and Universal Health 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 Universal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Outset Medical and Universal Health Services, you can compare the effects of market volatilities on Outset Medical and Universal Health 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 Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outset Medical and Universal Health.
Diversification Opportunities for Outset Medical and Universal Health
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Outset and Universal is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and Universal Health Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Services 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 Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Services has no effect on the direction of Outset Medical i.e., Outset Medical and Universal Health go up and down completely randomly.
Pair Corralation between Outset Medical and Universal Health
Allowing for the 90-day total investment horizon Outset Medical is expected to generate 5.42 times more return on investment than Universal Health. However, Outset Medical is 5.42 times more volatile than Universal Health Services. It trades about 0.33 of its potential returns per unit of risk. Universal Health Services is currently generating about -0.08 per unit of risk. If you would invest 55.00 in Outset Medical on August 28, 2024 and sell it today you would earn a total of 35.00 from holding Outset Medical or generate 63.64% 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. Universal Health Services
Performance |
| Timeline |
| Outset Medical |
| Universal Health Services |
Outset Medical and Universal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Outset Medical and Universal Health
The main advantage of trading using opposite Outset Medical and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outset Medical position performs unexpectedly, Universal Health 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 Universal Health will offset losses from the drop in Universal Health's long position.| Outset Medical vs. Inari Medical | Outset Medical vs. Clearpoint Neuro | Outset Medical vs. Inspire Medical Systems | Outset Medical vs. Nevro Corp |
| Universal Health vs. The Ensign Group | Universal Health vs. Addus HomeCare | Universal Health vs. Encompass Health Corp | Universal Health vs. Surgery Partners |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |