Correlation Between DexCom and Volkswagen
Can any of the company-specific risk be diversified away by investing in both DexCom and Volkswagen 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 Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DexCom Inc and Volkswagen AG, you can compare the effects of market volatilities on DexCom and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of DexCom and Volkswagen.
Diversification Opportunities for DexCom and Volkswagen
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between DexCom and Volkswagen is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of DexCom i.e., DexCom and Volkswagen go up and down completely randomly.
Pair Corralation between DexCom and Volkswagen
Assuming the 90 days horizon DexCom Inc is expected to generate 2.01 times more return on investment than Volkswagen. However, DexCom is 2.01 times more volatile than Volkswagen AG. It trades about -0.02 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.08 per unit of risk. If you would invest 10,970 in DexCom Inc on August 26, 2024 and sell it today you would lose (3,840) from holding DexCom Inc or give up 35.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DexCom Inc vs. Volkswagen AG
Performance |
| Timeline |
| DexCom Inc |
| Volkswagen AG |
DexCom and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DexCom and Volkswagen
The main advantage of trading using opposite DexCom and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DexCom position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.| DexCom vs. Superior Plus Corp | DexCom vs. Origin Agritech | DexCom vs. Identiv | DexCom vs. INTUITIVE SURGICAL |
| Volkswagen vs. AVITA Medical | Volkswagen vs. Clearside Biomedical | Volkswagen vs. IMAGIN MEDICAL INC | Volkswagen vs. TSOGO SUN GAMING |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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