Correlation Between Danaher and DexCom

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

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

Diversification Opportunities for Danaher and DexCom

0.28

Correlation Coefficient

Danaher  DexCom

Modest diversification

The 3 months correlation between Danaher and DexCom is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Danaher and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom Inc and Danaher 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 Danaher 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 Danaher i.e., Danaher and DexCom go up and down completely randomly.

Pair Corralation between Danaher and DexCom

Assuming the 90 days horizon Danaher is expected to under-perform the DexCom. But the stock apears to be less risky and, when comparing its historical volatility, Danaher is 1.5 times less risky than DexCom. The stock trades about -0.11 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  7,645  in DexCom Inc on December 29, 2024 and sell it today you would lose (954.00) from holding DexCom Inc or give up 12.48% of portfolio value over 90 days.

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

Danaher  vs.  DexCom Inc

Danaher

Risk-Adjusted Performance

Very Weak

Over the last 90 days Danaher has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic 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

Very Weak

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

Pair Trading with Danaher and DexCom

The main advantage of trading using opposite Danaher and DexCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danaher 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 Danaher 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.