Correlation Between DexCom and Electromed
Can any of the company-specific risk be diversified away by investing in both DexCom and Electromed 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 Electromed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DexCom Inc and Electromed, you can compare the effects of market volatilities on DexCom and Electromed 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 Electromed. Check out your portfolio center. Please also check ongoing floating volatility patterns of DexCom and Electromed.
Diversification Opportunities for DexCom and Electromed
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DexCom and Electromed is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and Electromed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electromed 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 Electromed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electromed has no effect on the direction of DexCom i.e., DexCom and Electromed go up and down completely randomly.
Pair Corralation between DexCom and Electromed
Given the investment horizon of 90 days DexCom Inc is expected to under-perform the Electromed. In addition to that, DexCom is 1.01 times more volatile than Electromed. It trades about -0.01 of its total potential returns per unit of risk. Electromed is currently generating about 0.08 per unit of volatility. If you would invest 1,196 in Electromed on September 19, 2024 and sell it today you would earn a total of 1,616 from holding Electromed or generate 135.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DexCom Inc vs. Electromed
Performance |
| Timeline |
| DexCom Inc |
| Electromed |
DexCom and Electromed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DexCom and Electromed
The main advantage of trading using opposite DexCom and Electromed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DexCom position performs unexpectedly, Electromed 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 Electromed will offset losses from the drop in Electromed's long position.| DexCom vs. Tandem Diabetes Care | DexCom vs. Inspire Medical Systems | DexCom vs. Penumbra | DexCom vs. Insulet |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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