Correlation Between DexCom and Fras Le

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

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

Diversification Opportunities for DexCom and Fras Le

0.02

Correlation Coefficient

DexCom  Fras Le

Significant diversification

The 3 months correlation between DexCom and Fras is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and Fras le SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fras le SA 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 Fras Le. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fras le SA has no effect on the direction of DexCom i.e., DexCom and Fras Le go up and down completely randomly.

Pair Corralation between DexCom and Fras Le

Assuming the 90 days trading horizon DexCom Inc is expected to generate 1.66 times more return on investment than Fras Le. However, DexCom is 1.66 times more volatile than Fras le SA. It trades about 0.09 of its potential returns per unit of risk. Fras le SA is currently generating about 0.07 per unit of risk. If you would invest  856.00  in DexCom Inc on September 12, 2024 and sell it today you would earn a total of  109.00  from holding DexCom Inc or generate 12.73% return on investment over 90 days.

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

DexCom Inc  vs.  Fras le SA

DexCom Inc

Risk-Adjusted Performance

7 of 100

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. Despite somewhat weak technical and fundamental indicators, DexCom sustained solid returns over the last few months and may actually be approaching a breakup point.

Fras le SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fras le SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Fras Le may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with DexCom and Fras Le

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

The idea behind DexCom Inc and Fras le SA 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.