Correlation Between Outset Medical and Patterson Companies

Can any of the company-specific risk be diversified away by investing in both Outset Medical and Patterson Companies 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 Patterson Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Outset Medical and Patterson Companies, you can compare the effects of market volatilities on Outset Medical and Patterson Companies 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 Patterson Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outset Medical and Patterson Companies.

Diversification Opportunities for Outset Medical and Patterson Companies

0.66

Correlation Coefficient

Outset Medical  Patterson Companies

Poor diversification

The 3 months correlation between Outset and Patterson is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and Patterson Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patterson Companies 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 Patterson Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patterson Companies has no effect on the direction of Outset Medical i.e., Outset Medical and Patterson Companies go up and down completely randomly.

Pair Corralation between Outset Medical and Patterson Companies

Allowing for the 90-day total investment horizon Outset Medical is expected to generate 1.35 times less return on investment than Patterson Companies. In addition to that, Outset Medical is 1.02 times more volatile than Patterson Companies. It trades about 0.18 of its total potential returns per unit of risk. Patterson Companies is currently generating about 0.25 per unit of volatility. If you would invest  2,149  in Patterson Companies on September 27, 2024 and sell it today you would earn a total of  941.00  from holding Patterson Companies or generate 43.79% 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.  Patterson Companies

Outset Medical

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Outset Medical are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent primary indicators, Outset Medical displayed solid returns over the last few months and may actually be approaching a breakup point.

Patterson Companies

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Patterson Companies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Patterson Companies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Outset Medical and Patterson Companies

The main advantage of trading using opposite Outset Medical and Patterson Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outset Medical position performs unexpectedly, Patterson Companies 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 Patterson Companies will offset losses from the drop in Patterson Companies' long position.

The idea behind Outset Medical and Patterson Companies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.