Correlation Between DexCom and Penumbra
Can any of the company-specific risk be diversified away by investing in both DexCom and Penumbra 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 Penumbra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DexCom Inc and Penumbra, you can compare the effects of market volatilities on DexCom and Penumbra 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 Penumbra. Check out your portfolio center. Please also check ongoing floating volatility patterns of DexCom and Penumbra.
Diversification Opportunities for DexCom and Penumbra
Very poor diversification
The 3 months correlation between DexCom and Penumbra is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and Penumbra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penumbra 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 Penumbra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penumbra has no effect on the direction of DexCom i.e., DexCom and Penumbra go up and down completely randomly.
Pair Corralation between DexCom and Penumbra
Given the investment horizon of 90 days DexCom is expected to generate 1.4 times less return on investment than Penumbra. But when comparing it to its historical volatility, DexCom Inc is 1.08 times less risky than Penumbra. It trades about 0.1 of its potential returns per unit of risk. Penumbra is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 20,497 in Penumbra on November 2, 2024 and sell it today you would earn a total of 6,403 from holding Penumbra or generate 31.24% 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. Penumbra
Performance |
| Timeline |
| DexCom Inc |
| Penumbra |
DexCom and Penumbra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DexCom and Penumbra
The main advantage of trading using opposite DexCom and Penumbra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DexCom position performs unexpectedly, Penumbra 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 Penumbra will offset losses from the drop in Penumbra's long position.| DexCom vs. Tandem Diabetes Care | DexCom vs. Inspire Medical Systems | DexCom vs. Penumbra | DexCom vs. Insulet |
| Penumbra vs. Insulet | Penumbra vs. TransMedics Group | Penumbra vs. Masimo | Penumbra vs. Inspire Medical Systems |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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