Correlation Between Varex Imaging and DexCom
Can any of the company-specific risk be diversified away by investing in both Varex Imaging 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 Varex Imaging and DexCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Varex Imaging Corp and DexCom Inc, you can compare the effects of market volatilities on Varex Imaging 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 Varex Imaging with a short position of DexCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Varex Imaging and DexCom.
Diversification Opportunities for Varex Imaging and DexCom
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Varex and DexCom is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Varex Imaging Corp and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom Inc and Varex Imaging 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 Varex Imaging 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 Varex Imaging i.e., Varex Imaging and DexCom go up and down completely randomly.
Pair Corralation between Varex Imaging and DexCom
Given the investment horizon of 90 days Varex Imaging Corp is expected to under-perform the DexCom. But the stock apears to be less risky and, when comparing its historical volatility, Varex Imaging Corp is 1.28 times less risky than DexCom. The stock trades about -0.01 of its potential returns per unit of risk. The DexCom Inc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 11,207 in DexCom Inc on September 19, 2024 and sell it today you would lose (3,427) from holding DexCom Inc or give up 30.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Varex Imaging Corp vs. DexCom Inc
Performance |
| Timeline |
| Varex Imaging Corp |
| DexCom Inc |
Varex Imaging and DexCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Varex Imaging and DexCom
The main advantage of trading using opposite Varex Imaging and DexCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Varex Imaging 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 Varex Imaging Corp 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.| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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