Correlation Between NuVasive and DexCom

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

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

Diversification Opportunities for NuVasive and DexCom

0.0

Correlation Coefficient

NuVasive  DexCom

Pay attention - limited upside

The 3 months correlation between NuVasive and DexCom is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NuVasive and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom Inc and NuVasive 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 NuVasive are associated (or correlated) with DexCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DexCom Inc has no effect on the direction of NuVasive i.e., NuVasive and DexCom go up and down completely randomly.

Pair Corralation between NuVasive and DexCom

If you would invest  7,772  in DexCom Inc on October 7, 2024 and sell it today you would earn a total of  335.00  from holding DexCom Inc or generate 4.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

NuVasive  vs.  DexCom Inc

NuVasive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NuVasive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NuVasive is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with NuVasive and DexCom

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

The idea behind NuVasive and DexCom Inc 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.