Correlation Between Identiv and DexCom
Can any of the company-specific risk be diversified away by investing in both Identiv 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 Identiv and DexCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Identiv and DexCom Inc, you can compare the effects of market volatilities on Identiv 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 Identiv with a short position of DexCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Identiv and DexCom.
Diversification Opportunities for Identiv and DexCom
Poor diversification
The 3 months correlation between Identiv and DexCom is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom Inc and Identiv 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 Identiv 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 Identiv i.e., Identiv and DexCom go up and down completely randomly.
Pair Corralation between Identiv and DexCom
Assuming the 90 days trading horizon Identiv is expected to generate 1.29 times more return on investment than DexCom. However, Identiv is 1.29 times more volatile than DexCom Inc. It trades about 0.22 of its potential returns per unit of risk. DexCom Inc is currently generating about 0.15 per unit of risk. If you would invest 322.00 in Identiv on August 29, 2024 and sell it today you would earn a total of 52.00 from holding Identiv or generate 16.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Identiv vs. DexCom Inc
Performance |
| Timeline |
| Identiv |
| DexCom Inc |
Identiv and DexCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Identiv and DexCom
The main advantage of trading using opposite Identiv and DexCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Identiv 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.| Identiv vs. NIPPON STEEL SPADR | Identiv vs. GFL ENVIRONM | Identiv vs. RELIANCE STEEL AL | Identiv vs. United States Steel |
| DexCom vs. Align Technology | DexCom vs. Microchip Technology Incorporated | DexCom vs. FANDIFI TECHNOLOGY P | DexCom vs. AECOM TECHNOLOGY |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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