Correlation Between Centene Corp and DexCom
Can any of the company-specific risk be diversified away by investing in both Centene Corp 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 Centene Corp and DexCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centene Corp and DexCom Inc, you can compare the effects of market volatilities on Centene Corp 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 Centene Corp with a short position of DexCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centene Corp and DexCom.
Diversification Opportunities for Centene Corp and DexCom
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Centene and DexCom is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Centene Corp and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom Inc and Centene Corp 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 Centene Corp 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 Centene Corp i.e., Centene Corp and DexCom go up and down completely randomly.
Pair Corralation between Centene Corp and DexCom
Considering the 90-day investment horizon Centene Corp is expected to under-perform the DexCom. But the stock apears to be less risky and, when comparing its historical volatility, Centene Corp is 1.32 times less risky than DexCom. The stock trades about -0.3 of its potential returns per unit of risk. The DexCom Inc is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest 12,705 in DexCom Inc on March 11, 2024 and sell it today you would lose (1,126) from holding DexCom Inc or give up 8.86% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Centene Corp vs. DexCom Inc
Performance |
Timeline |
Centene Corp |
DexCom Inc |
Centene Corp and DexCom Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Centene Corp and DexCom
The main advantage of trading using opposite Centene Corp and DexCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centene Corp 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.Centene Corp vs. Elevance Health | Centene Corp vs. Humana Inc | Centene Corp vs. Alignment Healthcare LLC | Centene Corp vs. CVS Health Corp |
Check out your portfolio center.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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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