Correlation Between Ion Beam and DexCom

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

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

Diversification Opportunities for Ion Beam and DexCom

-0.12

Correlation Coefficient

Ion Beam  DexCom

Good diversification

The 3 months correlation between Ion and DexCom is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ion Beam Applications and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom Inc and Ion Beam 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 Ion Beam Applications 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 Ion Beam i.e., Ion Beam and DexCom go up and down completely randomly.

Pair Corralation between Ion Beam and DexCom

Assuming the 90 days horizon Ion Beam Applications is expected to under-perform the DexCom. But the pink sheet apears to be less risky and, when comparing its historical volatility, Ion Beam Applications is 1.1 times less risky than DexCom. The pink sheet trades about -0.09 of its potential returns per unit of risk. The DexCom Inc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  6,970  in DexCom Inc on September 21, 2024 and sell it today you would earn a total of  1,034  from holding DexCom Inc or generate 14.84% return on investment over 90 days.

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

Ion Beam Applications  vs.  DexCom Inc

Ion Beam Applications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ion Beam Applications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

DexCom Inc

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DexCom Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, DexCom displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ion Beam and DexCom

The main advantage of trading using opposite Ion Beam and DexCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ion Beam 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 Ion Beam Applications 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.