Correlation Between DexCom and LENSAR
Can any of the company-specific risk be diversified away by investing in both DexCom and LENSAR 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 LENSAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DexCom Inc and LENSAR Inc, you can compare the effects of market volatilities on DexCom and LENSAR 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 LENSAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of DexCom and LENSAR.
Diversification Opportunities for DexCom and LENSAR
Poor diversification
The 3 months correlation between DexCom and LENSAR is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and LENSAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LENSAR Inc 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 LENSAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LENSAR Inc has no effect on the direction of DexCom i.e., DexCom and LENSAR go up and down completely randomly.
Pair Corralation between DexCom and LENSAR
Given the investment horizon of 90 days DexCom is expected to generate 3.72 times less return on investment than LENSAR. But when comparing it to its historical volatility, DexCom Inc is 2.15 times less risky than LENSAR. It trades about 0.16 of its potential returns per unit of risk. LENSAR Inc is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 560.00 in LENSAR Inc on August 29, 2024 and sell it today you would earn a total of 184.00 from holding LENSAR Inc or generate 32.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DexCom Inc vs. LENSAR Inc
Performance |
| Timeline |
| DexCom Inc |
| LENSAR Inc |
DexCom and LENSAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DexCom and LENSAR
The main advantage of trading using opposite DexCom and LENSAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DexCom position performs unexpectedly, LENSAR 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 LENSAR will offset losses from the drop in LENSAR's long position.| DexCom vs. Tandem Diabetes Care | DexCom vs. Inspire Medical Systems | DexCom vs. Penumbra | DexCom vs. Insulet |
| LENSAR vs. Edwards Lifesciences Corp | LENSAR vs. Outset Medical | LENSAR vs. Venus Concept | LENSAR 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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