Correlation Between DexCom and Precipio
Can any of the company-specific risk be diversified away by investing in both DexCom and Precipio 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 Precipio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DexCom Inc and Precipio, you can compare the effects of market volatilities on DexCom and Precipio 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 Precipio. Check out your portfolio center. Please also check ongoing floating volatility patterns of DexCom and Precipio.
Diversification Opportunities for DexCom and Precipio
Excellent diversification
The 3 months correlation between DexCom and Precipio is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and Precipio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precipio 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 Precipio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precipio has no effect on the direction of DexCom i.e., DexCom and Precipio go up and down completely randomly.
Pair Corralation between DexCom and Precipio
Given the investment horizon of 90 days DexCom Inc is expected to under-perform the Precipio. But the stock apears to be less risky and, when comparing its historical volatility, DexCom Inc is 1.24 times less risky than Precipio. The stock trades about -0.02 of its potential returns per unit of risk. The Precipio is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 960.00 in Precipio on August 31, 2024 and sell it today you would lose (366.00) from holding Precipio or give up 38.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DexCom Inc vs. Precipio
Performance |
| Timeline |
| DexCom Inc |
| Precipio |
DexCom and Precipio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DexCom and Precipio
The main advantage of trading using opposite DexCom and Precipio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DexCom position performs unexpectedly, Precipio 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 Precipio will offset losses from the drop in Precipio's long position.| DexCom vs. Abbott Laboratories | DexCom vs. Medtronic PLC | DexCom vs. Edwards Lifesciences Corp | DexCom vs. ZimVie Inc |
| Precipio vs. Biodesix | Precipio vs. Sera Prognostics | Precipio vs. Applied DNA Sciences | Precipio vs. Caredx 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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