Correlation Between DexCom and EXACT Sciences
Can any of the company-specific risk be diversified away by investing in both DexCom and EXACT Sciences 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 DexCom and EXACT Sciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DexCom Inc and EXACT Sciences, you can compare the effects of market volatilities on DexCom and EXACT Sciences 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 DexCom with a short position of EXACT Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of DexCom and EXACT Sciences.
Diversification Opportunities for DexCom and EXACT Sciences
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DexCom and EXACT is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and EXACT Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXACT Sciences and DexCom 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 DexCom Inc are associated (or correlated) with EXACT Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXACT Sciences has no effect on the direction of DexCom i.e., DexCom and EXACT Sciences go up and down completely randomly.
Pair Corralation between DexCom and EXACT Sciences
Given the investment horizon of 90 days DexCom Inc is expected to generate 0.77 times more return on investment than EXACT Sciences. However, DexCom Inc is 1.3 times less risky than EXACT Sciences. It trades about 0.06 of its potential returns per unit of risk. EXACT Sciences is currently generating about 0.03 per unit of risk. If you would invest 7,449 in DexCom Inc on January 20, 2024 and sell it today you would earn a total of 5,981 from holding DexCom Inc or generate 80.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
DexCom Inc vs. EXACT Sciences
Performance |
| Timeline |
| DexCom Inc |
| EXACT Sciences |
DexCom and EXACT Sciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DexCom and EXACT Sciences
The main advantage of trading using opposite DexCom and EXACT Sciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DexCom position performs unexpectedly, EXACT Sciences 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 EXACT Sciences will offset losses from the drop in EXACT Sciences' long position.The idea behind DexCom Inc and EXACT Sciences 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.| EXACT Sciences vs. Pmv PharmaceuticalsInc | EXACT Sciences vs. MediciNova | EXACT Sciences vs. Pharvaris BV | EXACT Sciences vs. PepGen |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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