Correlation Between DexCom and Koninklijke Philips
Can any of the company-specific risk be diversified away by investing in both DexCom and Koninklijke Philips 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 Koninklijke Philips into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DexCom Inc and Koninklijke Philips NV, you can compare the effects of market volatilities on DexCom and Koninklijke Philips 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 Koninklijke Philips. Check out your portfolio center. Please also check ongoing floating volatility patterns of DexCom and Koninklijke Philips.
Diversification Opportunities for DexCom and Koninklijke Philips
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between DexCom and Koninklijke is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and Koninklijke Philips NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Philips 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 Koninklijke Philips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke Philips has no effect on the direction of DexCom i.e., DexCom and Koninklijke Philips go up and down completely randomly.
Pair Corralation between DexCom and Koninklijke Philips
Given the investment horizon of 90 days DexCom Inc is expected to generate 2.27 times more return on investment than Koninklijke Philips. However, DexCom is 2.27 times more volatile than Koninklijke Philips NV. It trades about 0.27 of its potential returns per unit of risk. Koninklijke Philips NV is currently generating about -0.06 per unit of risk. If you would invest 7,031 in DexCom Inc on September 12, 2024 and sell it today you would earn a total of 1,016 from holding DexCom Inc or generate 14.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DexCom Inc vs. Koninklijke Philips NV
Performance |
| Timeline |
| DexCom Inc |
| Koninklijke Philips |
DexCom and Koninklijke Philips Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DexCom and Koninklijke Philips
The main advantage of trading using opposite DexCom and Koninklijke Philips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DexCom position performs unexpectedly, Koninklijke Philips 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 Koninklijke Philips will offset losses from the drop in Koninklijke Philips' long position.| DexCom vs. Tandem Diabetes Care | DexCom vs. Inspire Medical Systems | DexCom vs. Penumbra | DexCom vs. Insulet |
| Koninklijke Philips vs. ZimVie Inc | Koninklijke Philips vs. Stryker | Koninklijke Philips vs. Boston Scientific Corp | Koninklijke Philips vs. STERIS plc |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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