Correlation Between DexCom and Sonova Holding

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

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

Diversification Opportunities for DexCom and Sonova Holding

0.72

Correlation Coefficient

DexCom  Sonova Holding

Poor diversification

The 3 months correlation between DexCom and Sonova is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and Sonova Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonova Holding AG 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 Sonova Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonova Holding AG has no effect on the direction of DexCom i.e., DexCom and Sonova Holding go up and down completely randomly.

Pair Corralation between DexCom and Sonova Holding

Given the investment horizon of 90 days DexCom Inc is expected to under-perform the Sonova Holding. In addition to that, DexCom is 1.86 times more volatile than Sonova Holding AG. It trades about -0.07 of its total potential returns per unit of risk. Sonova Holding AG is currently generating about -0.11 per unit of volatility. If you would invest  6,544  in Sonova Holding AG on December 29, 2024 and sell it today you would lose (598.00) from holding Sonova Holding AG or give up 9.14% 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.  Sonova Holding AG

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.

Sonova Holding AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sonova Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with DexCom and Sonova Holding

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

The idea behind DexCom Inc and Sonova Holding AG 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.