Correlation Between Paycom Soft and DexCom

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

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

Diversification Opportunities for Paycom Soft and DexCom

0.46

Correlation Coefficient

Paycom Soft  DexCom

Very weak diversification

The 3 months correlation between Paycom and DexCom is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Paycom Soft and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom Inc and Paycom Soft 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 Paycom Soft 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 Paycom Soft i.e., Paycom Soft and DexCom go up and down completely randomly.

Pair Corralation between Paycom Soft and DexCom

Given the investment horizon of 90 days Paycom Soft is expected to under-perform the DexCom. But the stock apears to be less risky and, when comparing its historical volatility, Paycom Soft is 1.26 times less risky than DexCom. The stock trades about -0.15 of its potential returns per unit of risk. The DexCom Inc is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  8,696  in DexCom Inc on May 17, 2025 and sell it today you would lose (700.00) from holding DexCom Inc or give up 8.05% of portfolio value over 90 days.

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

Paycom Soft  vs.  DexCom Inc

Paycom Soft

Risk-Adjusted Performance

Weakest

Over the last 90 days Paycom Soft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in September 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

DexCom Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days DexCom Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Paycom Soft and DexCom

The main advantage of trading using opposite Paycom Soft and DexCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paycom Soft 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 Paycom Soft 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.

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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.