Correlation Between DexCom and Abbott Laboratories
Can any of the company-specific risk be diversified away by investing in both DexCom and Abbott Laboratories 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 Abbott Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DexCom Inc and Abbott Laboratories, you can compare the effects of market volatilities on DexCom and Abbott Laboratories 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 Abbott Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of DexCom and Abbott Laboratories.
Diversification Opportunities for DexCom and Abbott Laboratories
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between DexCom and Abbott is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and Abbott Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abbott Laboratories 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 Abbott Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abbott Laboratories has no effect on the direction of DexCom i.e., DexCom and Abbott Laboratories go up and down completely randomly.
Pair Corralation between DexCom and Abbott Laboratories
Given the investment horizon of 90 days DexCom Inc is expected to generate 1.48 times more return on investment than Abbott Laboratories. However, DexCom is 1.48 times more volatile than Abbott Laboratories. It trades about 0.07 of its potential returns per unit of risk. Abbott Laboratories is currently generating about 0.01 per unit of risk. If you would invest 7,248 in DexCom Inc on August 24, 2024 and sell it today you would earn a total of 198.00 from holding DexCom Inc or generate 2.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DexCom Inc vs. Abbott Laboratories
Performance |
| Timeline |
| DexCom Inc |
| Abbott Laboratories |
DexCom and Abbott Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DexCom and Abbott Laboratories
The main advantage of trading using opposite DexCom and Abbott Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DexCom position performs unexpectedly, Abbott Laboratories 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 Abbott Laboratories will offset losses from the drop in Abbott Laboratories' long position.| DexCom vs. Tandem Diabetes Care | DexCom vs. Inspire Medical Systems | DexCom vs. Penumbra | DexCom vs. Insulet |
| Abbott Laboratories vs. Edwards Lifesciences Corp | Abbott Laboratories vs. Outset Medical | Abbott Laboratories vs. Venus Concept | Abbott Laboratories vs. DexCom 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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