Correlation Between Electrocore LLC and DexCom
Can any of the company-specific risk be diversified away by investing in both Electrocore LLC and DexCom 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 Electrocore LLC and DexCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electrocore LLC and DexCom Inc, you can compare the effects of market volatilities on Electrocore LLC and DexCom 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 Electrocore LLC with a short position of DexCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electrocore LLC and DexCom.
Diversification Opportunities for Electrocore LLC and DexCom
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Electrocore and DexCom is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Electrocore LLC and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom Inc and Electrocore LLC 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 Electrocore LLC are associated (or correlated) with DexCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DexCom Inc has no effect on the direction of Electrocore LLC i.e., Electrocore LLC and DexCom go up and down completely randomly.
Pair Corralation between Electrocore LLC and DexCom
Given the investment horizon of 90 days Electrocore LLC is expected to generate 2.6 times more return on investment than DexCom. However, Electrocore LLC is 2.6 times more volatile than DexCom Inc. It trades about 0.31 of its potential returns per unit of risk. DexCom Inc is currently generating about 0.1 per unit of risk. If you would invest 1,009 in Electrocore LLC on September 20, 2024 and sell it today you would earn a total of 384.00 from holding Electrocore LLC or generate 38.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electrocore LLC vs. DexCom Inc
Performance |
| Timeline |
| Electrocore LLC |
| DexCom Inc |
Electrocore LLC and DexCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electrocore LLC and DexCom
The main advantage of trading using opposite Electrocore LLC and DexCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electrocore LLC position performs unexpectedly, DexCom 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 DexCom will offset losses from the drop in DexCom's long position.| Electrocore LLC vs. STRATA Skin Sciences | Electrocore LLC vs. Sight Sciences | Electrocore LLC vs. Neuropace | Electrocore LLC vs. IRIDEX |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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