Correlation Between DexCom and Laboratory
Can any of the company-specific risk be diversified away by investing in both DexCom and Laboratory 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 Laboratory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DexCom Inc and Laboratory of, you can compare the effects of market volatilities on DexCom and Laboratory 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 Laboratory. Check out your portfolio center. Please also check ongoing floating volatility patterns of DexCom and Laboratory.
Diversification Opportunities for DexCom and Laboratory
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between DexCom and Laboratory is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and Laboratory of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laboratory 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 Laboratory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laboratory has no effect on the direction of DexCom i.e., DexCom and Laboratory go up and down completely randomly.
Pair Corralation between DexCom and Laboratory
Given the investment horizon of 90 days DexCom Inc is expected to generate 1.96 times more return on investment than Laboratory. However, DexCom is 1.96 times more volatile than Laboratory of. It trades about 0.03 of its potential returns per unit of risk. Laboratory of is currently generating about 0.0 per unit of risk. If you would invest 10,326 in DexCom Inc on January 17, 2024 and sell it today you would earn a total of 3,130 from holding DexCom Inc or generate 30.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DexCom Inc vs. Laboratory of
Performance |
| Timeline |
| DexCom Inc |
| Laboratory |
DexCom and Laboratory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DexCom and Laboratory
The main advantage of trading using opposite DexCom and Laboratory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DexCom position performs unexpectedly, Laboratory 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 Laboratory will offset losses from the drop in Laboratory's long position.| DexCom vs. The Ensign Group | DexCom vs. Select Medical Holdings | DexCom vs. Encompass Health Corp | DexCom vs. Enhabit |
| Laboratory vs. Quest Diagnostics Incorporated | Laboratory vs. Waters | Laboratory vs. Universal Health Services | Laboratory vs. Humana Inc |
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 CEOs Directory module to screen CEOs from public companies around the world.
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