Correlation Between DexCom and Upstart Holdings

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

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

Diversification Opportunities for DexCom and Upstart Holdings

0.33

Correlation Coefficient

DexCom  Upstart Holdings

Weak diversification

The 3 months correlation between DexCom and Upstart is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and Upstart Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upstart Holdings 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 Upstart Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upstart Holdings has no effect on the direction of DexCom i.e., DexCom and Upstart Holdings go up and down completely randomly.

Pair Corralation between DexCom and Upstart Holdings

Given the investment horizon of 90 days DexCom Inc is expected to under-perform the Upstart Holdings. But the stock apears to be less risky and, when comparing its historical volatility, DexCom Inc is 1.05 times less risky than Upstart Holdings. The stock trades about -0.06 of its potential returns per unit of risk. The Upstart Holdings is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  7,339  in Upstart Holdings on May 3, 2025 and sell it today you would earn a total of  835.00  from holding Upstart Holdings or generate 11.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

DexCom Inc  vs.  Upstart Holdings

DexCom Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DexCom Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, DexCom is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Upstart Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Upstart Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Upstart Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DexCom and Upstart Holdings

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

The idea behind DexCom Inc and Upstart Holdings 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.