Correlation Between Amazon and DexCom

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

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

Diversification Opportunities for Amazon and DexCom

0.56

Correlation Coefficient

Amazon  DexCom

Very weak diversification

The 3 months correlation between Amazon and DexCom is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom Inc and Amazon 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 Amazon Inc 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 Amazon i.e., Amazon and DexCom go up and down completely randomly.

Pair Corralation between Amazon and DexCom

Assuming the 90 days trading horizon Amazon Inc is expected to generate 0.77 times more return on investment than DexCom. However, Amazon Inc is 1.3 times less risky than DexCom. It trades about 0.21 of its potential returns per unit of risk. DexCom Inc is currently generating about 0.12 per unit of risk. If you would invest  4,940  in Amazon Inc on April 22, 2025 and sell it today you would earn a total of  1,382  from holding Amazon Inc or generate 27.98% return on investment over 90 days.

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

Amazon Inc  vs.  DexCom Inc

Amazon Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Amazon sustained solid returns over the last few months and may actually be approaching a breakup point.

DexCom Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DexCom Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, DexCom sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amazon and DexCom

The main advantage of trading using opposite Amazon and DexCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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 Amazon Inc 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.

Check out your portfolio center.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..