Correlation Between Guardant Health and DexCom

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Can any of the company-specific risk be diversified away by investing in both Guardant Health 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 Guardant Health and DexCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guardant Health and DexCom Inc, you can compare the effects of market volatilities on Guardant Health 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 Guardant Health with a short position of DexCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardant Health and DexCom.

Diversification Opportunities for Guardant Health and DexCom

-0.34
  Correlation Coefficient

Very good diversification

The 3 months correlation between Guardant and DexCom is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Guardant Health and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom Inc and Guardant Health 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 Guardant Health 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 Guardant Health i.e., Guardant Health and DexCom go up and down completely randomly.

Pair Corralation between Guardant Health and DexCom

Allowing for the 90-day total investment horizon Guardant Health is expected to under-perform the DexCom. But the stock apears to be less risky and, when comparing its historical volatility, Guardant Health is 1.06 times less risky than DexCom. The stock trades about -0.13 of its potential returns per unit of risk. The DexCom Inc is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  11,532  in DexCom Inc on December 29, 2023 and sell it today you would earn a total of  2,416  from holding DexCom Inc or generate 20.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Guardant Health  vs.  DexCom Inc

 Performance 
       Timeline  
Guardant Health 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Guardant Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
DexCom Inc 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in DexCom Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, DexCom displayed solid returns over the last few months and may actually be approaching a breakup point.

Guardant Health and DexCom Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Guardant Health and DexCom

The main advantage of trading using opposite Guardant Health and DexCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guardant Health 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 Guardant Health 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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