Correlation Between DexCom and SIEMENS HEALTH

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

By analyzing existing cross correlation between DexCom Inc and SIEMENS HEALTH ADR050, you can compare the effects of market volatilities on DexCom and SIEMENS HEALTH 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 SIEMENS HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of DexCom and SIEMENS HEALTH.

Diversification Opportunities for DexCom and SIEMENS HEALTH

-0.23

Correlation Coefficient

DexCom  SIEMENS HEALTH

Very good diversification

The 3 months correlation between DexCom and SIEMENS is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and SIEMENS HEALTH ADR050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIEMENS HEALTH ADR050 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 SIEMENS HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIEMENS HEALTH ADR050 has no effect on the direction of DexCom i.e., DexCom and SIEMENS HEALTH go up and down completely randomly.

Pair Corralation between DexCom and SIEMENS HEALTH

Assuming the 90 days horizon DexCom Inc is expected to generate 0.99 times more return on investment than SIEMENS HEALTH. However, DexCom Inc is 1.01 times less risky than SIEMENS HEALTH. It trades about 0.14 of its potential returns per unit of risk. SIEMENS HEALTH ADR050 is currently generating about -0.01 per unit of risk. If you would invest  6,228  in DexCom Inc on September 3, 2024 and sell it today you would earn a total of  1,195  from holding DexCom Inc or generate 19.19% return on investment over 90 days.

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

DexCom Inc  vs.  SIEMENS HEALTH ADR050

DexCom Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DexCom Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DexCom reported solid returns over the last few months and may actually be approaching a breakup point.

SIEMENS HEALTH ADR050

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIEMENS HEALTH ADR050 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, SIEMENS HEALTH is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with DexCom and SIEMENS HEALTH

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

The idea behind DexCom Inc and SIEMENS HEALTH ADR050 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.