Correlation Between Edwards Lifesciences and DexCom
Can any of the company-specific risk be diversified away by investing in both Edwards Lifesciences 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 Edwards Lifesciences and DexCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edwards Lifesciences Corp and DexCom Inc, you can compare the effects of market volatilities on Edwards Lifesciences 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 Edwards Lifesciences with a short position of DexCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edwards Lifesciences and DexCom.
Diversification Opportunities for Edwards Lifesciences and DexCom
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Edwards and DexCom is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Edwards Lifesciences Corp and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom Inc and Edwards Lifesciences 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 Edwards Lifesciences Corp 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 Edwards Lifesciences i.e., Edwards Lifesciences and DexCom go up and down completely randomly.
Pair Corralation between Edwards Lifesciences and DexCom
Allowing for the 90-day total investment horizon Edwards Lifesciences Corp is expected to generate 0.72 times more return on investment than DexCom. However, Edwards Lifesciences Corp is 1.38 times less risky than DexCom. It trades about -0.02 of its potential returns per unit of risk. DexCom Inc is currently generating about -0.02 per unit of risk. If you would invest 9,096 in Edwards Lifesciences Corp on August 28, 2024 and sell it today you would lose (1,969) from holding Edwards Lifesciences Corp or give up 21.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edwards Lifesciences Corp vs. DexCom Inc
Performance |
| Timeline |
| Edwards Lifesciences Corp |
| DexCom Inc |
Edwards Lifesciences and DexCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edwards Lifesciences and DexCom
The main advantage of trading using opposite Edwards Lifesciences and DexCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edwards Lifesciences 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.| Edwards Lifesciences vs. Medtronic PLC | Edwards Lifesciences vs. Abbott Laboratories | Edwards Lifesciences vs. Boston Scientific Corp | Edwards Lifesciences vs. Zimmer Biomet Holdings |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Stocks Directory Find actively traded stocks across global markets |