Correlation Between DexCom and HealthStream

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

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

Diversification Opportunities for DexCom and HealthStream

-0.82

Correlation Coefficient

DexCom  HealthStream

Pay attention - limited upside

The 3 months correlation between DexCom and HealthStream is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and HealthStream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HealthStream and DexCom 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 DexCom Inc are associated (or correlated) with HealthStream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HealthStream has no effect on the direction of DexCom i.e., DexCom and HealthStream go up and down completely randomly.

Pair Corralation between DexCom and HealthStream

Given the investment horizon of 90 days DexCom Inc is expected to generate 1.01 times more return on investment than HealthStream. However, DexCom is 1.01 times more volatile than HealthStream. It trades about 0.15 of its potential returns per unit of risk. HealthStream is currently generating about -0.09 per unit of risk. If you would invest  6,611  in DexCom Inc on April 20, 2025 and sell it today you would earn a total of  1,778  from holding DexCom Inc or generate 26.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

DexCom Inc  vs.  HealthStream

DexCom Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DexCom Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, DexCom displayed solid returns over the last few months and may actually be approaching a breakup point.

HealthStream

Risk-Adjusted Performance

Very Weak

Over the last 90 days HealthStream has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in August 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with DexCom and HealthStream

The main advantage of trading using opposite DexCom and HealthStream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DexCom position performs unexpectedly, HealthStream 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 HealthStream will offset losses from the drop in HealthStream's long position.

The idea behind DexCom Inc and HealthStream 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.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.