Correlation Between Apple and DexCom

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

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

Diversification Opportunities for Apple and DexCom

0.63

Correlation Coefficient

Apple  DexCom

Poor diversification

The 3 months correlation between Apple and DexCom is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom Inc and Apple 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 Apple Inc 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 Apple i.e., Apple and DexCom go up and down completely randomly.

Pair Corralation between Apple and DexCom

Assuming the 90 days trading horizon Apple Inc is expected to under-perform the DexCom. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc is 1.36 times less risky than DexCom. The stock trades about -0.18 of its potential returns per unit of risk. The DexCom Inc is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  7,587  in DexCom Inc on December 21, 2024 and sell it today you would lose (856.00) from holding DexCom Inc or give up 11.28% of portfolio value over 90 days.

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

Apple Inc  vs.  DexCom Inc

Apple Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

DexCom Inc

Risk-Adjusted Performance

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 fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Apple and DexCom

The main advantage of trading using opposite Apple and DexCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.