Correlation Between IQVIA Holdings and DexCom

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

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

Diversification Opportunities for IQVIA Holdings and DexCom

-0.76

Correlation Coefficient

IQVIA Holdings  DexCom

Pay attention - limited upside

The 3 months correlation between IQVIA and DexCom is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding IQVIA Holdings and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom Inc and IQVIA Holdings 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 IQVIA Holdings 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 IQVIA Holdings i.e., IQVIA Holdings and DexCom go up and down completely randomly.

Pair Corralation between IQVIA Holdings and DexCom

Assuming the 90 days horizon IQVIA Holdings is expected to generate 0.56 times more return on investment than DexCom. However, IQVIA Holdings is 1.8 times less risky than DexCom. It trades about 0.01 of its potential returns per unit of risk. DexCom Inc is currently generating about 0.0 per unit of risk. If you would invest  19,600  in IQVIA Holdings on September 12, 2024 and sell it today you would lose (350.00) from holding IQVIA Holdings or give up 1.79% of portfolio value over 90 days.

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

IQVIA Holdings  vs.  DexCom Inc

IQVIA Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IQVIA Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

DexCom Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DexCom Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DexCom reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IQVIA Holdings and DexCom

The main advantage of trading using opposite IQVIA Holdings and DexCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQVIA Holdings 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 IQVIA Holdings 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.