Correlation Between DexCom and Integra LifeSciences

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

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

Diversification Opportunities for DexCom and Integra LifeSciences

0.62

Correlation Coefficient

DexCom  Integra LifeSciences

Poor diversification

The 3 months correlation between DexCom and Integra is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and Integra LifeSciences Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integra LifeSciences 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 Integra LifeSciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integra LifeSciences has no effect on the direction of DexCom i.e., DexCom and Integra LifeSciences go up and down completely randomly.

Pair Corralation between DexCom and Integra LifeSciences

Given the investment horizon of 90 days DexCom Inc is expected to under-perform the Integra LifeSciences. In addition to that, DexCom is 1.18 times more volatile than Integra LifeSciences Holdings. It trades about -0.03 of its total potential returns per unit of risk. Integra LifeSciences Holdings is currently generating about -0.04 per unit of volatility. If you would invest  2,873  in Integra LifeSciences Holdings on October 1, 2024 and sell it today you would lose (640.00) from holding Integra LifeSciences Holdings or give up 22.28% 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.  Integra LifeSciences Holdings

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. In spite of very unfluctuating fundamental indicators, DexCom displayed solid returns over the last few months and may actually be approaching a breakup point.

Integra LifeSciences

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Integra LifeSciences Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Integra LifeSciences unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DexCom and Integra LifeSciences

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

The idea behind DexCom Inc and Integra LifeSciences Holdings 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.