Correlation Between DexCom and Electrocore LLC

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

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

Diversification Opportunities for DexCom and Electrocore LLC

-0.33

Correlation Coefficient

DexCom  Electrocore LLC

Very good diversification

The 3 months correlation between DexCom and Electrocore is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and Electrocore LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrocore LLC 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 Electrocore LLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrocore LLC has no effect on the direction of DexCom i.e., DexCom and Electrocore LLC go up and down completely randomly.

Pair Corralation between DexCom and Electrocore LLC

Given the investment horizon of 90 days DexCom Inc is expected to under-perform the Electrocore LLC. But the stock apears to be less risky and, when comparing its historical volatility, DexCom Inc is 1.61 times less risky than Electrocore LLC. The stock trades about -0.07 of its potential returns per unit of risk. The Electrocore LLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  645.00  in Electrocore LLC on March 13, 2024 and sell it today you would earn a total of  10.00  from holding Electrocore LLC or generate 1.55% 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.  Electrocore LLC

DexCom Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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 uncertain 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.

Electrocore LLC

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Electrocore LLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Electrocore LLC is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with DexCom and Electrocore LLC

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

The idea behind DexCom Inc and Electrocore LLC 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.