Correlation Between Inogen and DexCom
Can any of the company-specific risk be diversified away by investing in both Inogen 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 Inogen and DexCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inogen Inc and DexCom Inc, you can compare the effects of market volatilities on Inogen 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 Inogen with a short position of DexCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inogen and DexCom.
Diversification Opportunities for Inogen and DexCom
Good diversification
The 3 months correlation between Inogen and DexCom is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Inogen Inc and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom Inc and Inogen 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 Inogen Inc 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 Inogen i.e., Inogen and DexCom go up and down completely randomly.
Pair Corralation between Inogen and DexCom
Given the investment horizon of 90 days Inogen Inc is expected to under-perform the DexCom. In addition to that, Inogen is 1.44 times more volatile than DexCom Inc. It trades about -0.16 of its total potential returns per unit of risk. DexCom Inc is currently generating about 0.1 per unit of volatility. If you would invest 7,488 in DexCom Inc on September 20, 2024 and sell it today you would earn a total of 292.00 from holding DexCom Inc or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inogen Inc vs. DexCom Inc
Performance |
| Timeline |
| Inogen Inc |
| DexCom Inc |
Inogen and DexCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inogen and DexCom
The main advantage of trading using opposite Inogen and DexCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inogen 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.The idea behind Inogen Inc and DexCom Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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