Correlation Between DexCom and TruBridge

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

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

Diversification Opportunities for DexCom and TruBridge

0.91

Correlation Coefficient

DexCom  TruBridge

Almost no diversification

The 3 months correlation between DexCom and TruBridge is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and TruBridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TruBridge 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 TruBridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TruBridge has no effect on the direction of DexCom i.e., DexCom and TruBridge go up and down completely randomly.

Pair Corralation between DexCom and TruBridge

Given the investment horizon of 90 days DexCom is expected to generate 2.6 times less return on investment than TruBridge. But when comparing it to its historical volatility, DexCom Inc is 1.15 times less risky than TruBridge. It trades about 0.13 of its potential returns per unit of risk. TruBridge is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  1,195  in TruBridge on September 12, 2024 and sell it today you would earn a total of  614.00  from holding TruBridge or generate 51.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

DexCom Inc  vs.  TruBridge

DexCom Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DexCom Inc are ranked lower than 10 (%) 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.

TruBridge

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TruBridge are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, TruBridge reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DexCom and TruBridge

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

The idea behind DexCom Inc and TruBridge 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.