Correlation Between DexCom and CareCloud

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

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

Diversification Opportunities for DexCom and CareCloud

0.78

Correlation Coefficient

DexCom  CareCloud

Poor diversification

The 3 months correlation between DexCom and CareCloud is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and CareCloud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareCloud 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 CareCloud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareCloud has no effect on the direction of DexCom i.e., DexCom and CareCloud go up and down completely randomly.

Pair Corralation between DexCom and CareCloud

Given the investment horizon of 90 days DexCom Inc is expected to generate 0.35 times more return on investment than CareCloud. However, DexCom Inc is 2.86 times less risky than CareCloud. It trades about -0.07 of its potential returns per unit of risk. CareCloud is currently generating about -0.19 per unit of risk. If you would invest  7,800  in DexCom Inc on December 29, 2024 and sell it today you would lose (853.00) from holding DexCom Inc or give up 10.94% of portfolio value over 90 days.

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

DexCom Inc  vs.  CareCloud

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 unfluctuating 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.

CareCloud

Risk-Adjusted Performance

Very Weak

Over the last 90 days CareCloud has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with DexCom and CareCloud

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

The idea behind DexCom Inc and CareCloud 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.