Correlation Between Predictive Oncology and DexCom

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

By analyzing existing cross correlation between Predictive Oncology and DexCom Inc, you can compare the effects of market volatilities on Predictive Oncology and DexCom 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 Predictive Oncology with a short position of DexCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Predictive Oncology and DexCom.

Diversification Opportunities for Predictive Oncology and DexCom

-0.66

Correlation Coefficient

Predictive Oncology  DexCom

Excellent diversification

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

Pair Corralation between Predictive Oncology and DexCom

Given the investment horizon of 90 days Predictive Oncology is expected to under-perform the DexCom. In addition to that, Predictive Oncology is 3.01 times more volatile than DexCom Inc. It trades about -0.26 of its total potential returns per unit of risk. DexCom Inc is currently generating about -0.14 per unit of volatility. If you would invest  13,794  in DexCom Inc on January 31, 2024 and sell it today you would lose (1,213) from holding DexCom Inc or give up 8.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Predictive Oncology  vs.  DexCom Inc

Predictive Oncology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Predictive Oncology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

DexCom Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DexCom Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, DexCom is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Predictive Oncology and DexCom

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

The idea behind Predictive Oncology and DexCom Inc 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.