Correlation Between Quidel and DexCom

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

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

Diversification Opportunities for Quidel and DexCom

-0.5

Correlation Coefficient

Quidel  DexCom

Very good diversification

The 3 months correlation between Quidel and DexCom is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Quidel and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom Inc and Quidel 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 Quidel 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 Quidel i.e., Quidel and DexCom go up and down completely randomly.

Pair Corralation between Quidel and DexCom

Given the investment horizon of 90 days Quidel is expected to generate 1.59 times more return on investment than DexCom. However, Quidel is 1.59 times more volatile than DexCom Inc. It trades about 0.16 of its potential returns per unit of risk. DexCom Inc is currently generating about 0.01 per unit of risk. If you would invest  3,739  in Quidel on September 18, 2024 and sell it today you would earn a total of  396.00  from holding Quidel or generate 10.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Quidel  vs.  DexCom Inc

Quidel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quidel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

DexCom Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DexCom Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental indicators, DexCom may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Quidel and DexCom

The main advantage of trading using opposite Quidel and DexCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quidel 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 Quidel 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.