Correlation Between FLDM and DexCom

Can any of the company-specific risk be diversified away by investing in both FLDM 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 FLDM and DexCom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FLDM and DexCom Inc, you can compare the effects of market volatilities on FLDM 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 FLDM with a short position of DexCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLDM and DexCom.

Diversification Opportunities for FLDM and DexCom

0.0

Correlation Coefficient

FLDM  DexCom

Pay attention - limited upside

The 3 months correlation between FLDM and DexCom is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding FLDM and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom Inc and FLDM 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 FLDM 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 FLDM i.e., FLDM and DexCom go up and down completely randomly.

Pair Corralation between FLDM and DexCom

If you would invest  12,123  in DexCom Inc on February 5, 2024 and sell it today you would earn a total of  714.00  from holding DexCom Inc or generate 5.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

FLDM  vs.  DexCom Inc

FLDM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FLDM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, FLDM is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

DexCom Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DexCom Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, DexCom may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with FLDM and DexCom

The main advantage of trading using opposite FLDM and DexCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLDM 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 FLDM 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.