Correlation Between DexCom and Varex Imaging
Can any of the company-specific risk be diversified away by investing in both DexCom and Varex Imaging 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 Varex Imaging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DexCom Inc and Varex Imaging Corp, you can compare the effects of market volatilities on DexCom and Varex Imaging 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 Varex Imaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of DexCom and Varex Imaging.
Diversification Opportunities for DexCom and Varex Imaging
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DexCom and Varex is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and Varex Imaging Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varex Imaging Corp 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 Varex Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varex Imaging Corp has no effect on the direction of DexCom i.e., DexCom and Varex Imaging go up and down completely randomly.
Pair Corralation between DexCom and Varex Imaging
Given the investment horizon of 90 days DexCom Inc is expected to generate 1.41 times more return on investment than Varex Imaging. However, DexCom is 1.41 times more volatile than Varex Imaging Corp. It trades about -0.01 of its potential returns per unit of risk. Varex Imaging Corp is currently generating about -0.03 per unit of risk. If you would invest 11,356 in DexCom Inc on September 19, 2024 and sell it today you would lose (3,576) from holding DexCom Inc or give up 31.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DexCom Inc vs. Varex Imaging Corp
Performance |
| Timeline |
| DexCom Inc |
| Varex Imaging Corp |
DexCom and Varex Imaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DexCom and Varex Imaging
The main advantage of trading using opposite DexCom and Varex Imaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DexCom position performs unexpectedly, Varex Imaging 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 Varex Imaging will offset losses from the drop in Varex Imaging'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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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