Correlation Between Perdoceo Education and DexCom

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

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

Diversification Opportunities for Perdoceo Education and DexCom

0.87

Correlation Coefficient

Perdoceo Education  DexCom

Very poor diversification

The 3 months correlation between Perdoceo and DexCom is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Perdoceo Education and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom Inc and Perdoceo Education 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 Perdoceo Education 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 Perdoceo Education i.e., Perdoceo Education and DexCom go up and down completely randomly.

Pair Corralation between Perdoceo Education and DexCom

Assuming the 90 days horizon Perdoceo Education is expected to generate 16.54 times less return on investment than DexCom. In addition to that, Perdoceo Education is 1.03 times more volatile than DexCom Inc. It trades about 0.01 of its total potential returns per unit of risk. DexCom Inc is currently generating about 0.15 per unit of volatility. If you would invest  7,335  in DexCom Inc on October 8, 2024 and sell it today you would earn a total of  295.00  from holding DexCom Inc or generate 4.02% return on investment over 90 days.

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

Perdoceo Education  vs.  DexCom Inc

Perdoceo Education

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Perdoceo Education are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Perdoceo Education reported solid returns over the last few months and may actually be approaching a breakup point.

DexCom Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DexCom Inc are ranked lower than 12 (%) 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.

Pair Trading with Perdoceo Education and DexCom

The main advantage of trading using opposite Perdoceo Education and DexCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perdoceo Education 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 Perdoceo Education 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.