Correlation Between Align Technology and DexCom
Can any of the company-specific risk be diversified away by investing in both Align Technology 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 Align Technology and DexCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and DexCom Inc, you can compare the effects of market volatilities on Align Technology 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 Align Technology with a short position of DexCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and DexCom.
Diversification Opportunities for Align Technology and DexCom
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Align and DexCom is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom Inc and Align Technology 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 Align Technology 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 Align Technology i.e., Align Technology and DexCom go up and down completely randomly.
Pair Corralation between Align Technology and DexCom
Given the investment horizon of 90 days Align Technology is expected to generate 0.85 times more return on investment than DexCom. However, Align Technology is 1.18 times less risky than DexCom. It trades about -0.02 of its potential returns per unit of risk. DexCom Inc is currently generating about -0.02 per unit of risk. If you would invest 33,682 in Align Technology on August 28, 2024 and sell it today you would lose (9,630) from holding Align Technology or give up 28.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Align Technology vs. DexCom Inc
Performance |
| Timeline |
| Align Technology |
| DexCom Inc |
Align Technology and DexCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and DexCom
The main advantage of trading using opposite Align Technology and DexCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology 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.| Align Technology vs. Insulet | Align Technology vs. Tandem Diabetes Care | Align Technology vs. Abbott Laboratories | Align Technology vs. Stryker |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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