Correlation Between DexCom and Nexalin Technology

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

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

Diversification Opportunities for DexCom and Nexalin Technology

0.66

Correlation Coefficient

DexCom  Nexalin Technology

Poor diversification

The 3 months correlation between DexCom and Nexalin is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and Nexalin Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexalin Technology 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 Nexalin Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexalin Technology has no effect on the direction of DexCom i.e., DexCom and Nexalin Technology go up and down completely randomly.

Pair Corralation between DexCom and Nexalin Technology

Given the investment horizon of 90 days DexCom Inc is expected to generate 0.09 times more return on investment than Nexalin Technology. However, DexCom Inc is 10.85 times less risky than Nexalin Technology. It trades about 0.06 of its potential returns per unit of risk. Nexalin Technology is currently generating about -0.09 per unit of risk. If you would invest  7,841  in DexCom Inc on October 10, 2024 and sell it today you would earn a total of  168.00  from holding DexCom Inc or generate 2.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	85.71%
Values	Daily Returns

DexCom Inc  vs.  Nexalin Technology

DexCom Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DexCom Inc are ranked lower than 8 (%) 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.

Nexalin Technology

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nexalin Technology are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal forward indicators, Nexalin Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DexCom and Nexalin Technology

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

The idea behind DexCom Inc and Nexalin Technology 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.