Correlation Between Outset Medical and Privia Health

Can any of the company-specific risk be diversified away by investing in both Outset Medical and Privia 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 Privia 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 Privia Health Group, you can compare the effects of market volatilities on Outset Medical and Privia 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 Privia Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outset Medical and Privia Health.

Diversification Opportunities for Outset Medical and Privia Health

0.73

Correlation Coefficient

Outset Medical  Privia Health

Poor diversification

The 3 months correlation between Outset and Privia is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and Privia Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Privia Health Group 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 Privia Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Privia Health Group has no effect on the direction of Outset Medical i.e., Outset Medical and Privia Health go up and down completely randomly.

Pair Corralation between Outset Medical and Privia Health

Allowing for the 90-day total investment horizon Outset Medical is expected to generate 3.4 times more return on investment than Privia Health. However, Outset Medical is 3.4 times more volatile than Privia Health Group. It trades about 0.19 of its potential returns per unit of risk. Privia Health Group is currently generating about -0.23 per unit of risk. If you would invest  90.00  in Outset Medical on September 25, 2024 and sell it today you would earn a total of  27.00  from holding Outset Medical or generate 30.0% 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.  Privia Health Group

Outset Medical

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Outset Medical are ranked lower than 15 (%) 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.

Privia Health Group

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Privia Health Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Privia Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Outset Medical and Privia Health

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

The idea behind Outset Medical and Privia Health Group 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.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.