Correlation Between DexCom and Adapthealth Corp

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

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

Diversification Opportunities for DexCom and Adapthealth Corp

0.02

Correlation Coefficient

DexCom  Adapthealth Corp

Significant diversification

The 3 months correlation between DexCom and Adapthealth is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and Adapthealth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adapthealth Corp 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 Adapthealth Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adapthealth Corp has no effect on the direction of DexCom i.e., DexCom and Adapthealth Corp go up and down completely randomly.

Pair Corralation between DexCom and Adapthealth Corp

Given the investment horizon of 90 days DexCom Inc is expected to under-perform the Adapthealth Corp. But the stock apears to be less risky and, when comparing its historical volatility, DexCom Inc is 1.71 times less risky than Adapthealth Corp. The stock trades about -0.04 of its potential returns per unit of risk. The Adapthealth Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,017  in Adapthealth Corp on December 22, 2024 and sell it today you would lose (18.00) from holding Adapthealth Corp or give up 1.77% of portfolio value over 90 days.

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

DexCom Inc  vs.  Adapthealth Corp

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 very healthy fundamental indicators, DexCom is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Adapthealth Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adapthealth Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Adapthealth Corp is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with DexCom and Adapthealth Corp

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

The idea behind DexCom Inc and Adapthealth Corp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.