Correlation Between DexCom and IDEXX Laboratories

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

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

Diversification Opportunities for DexCom and IDEXX Laboratories

0.85

Correlation Coefficient

DexCom  IDEXX Laboratories

Very poor diversification

The 3 months correlation between DexCom and IDEXX is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and IDEXX Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDEXX Laboratories 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 IDEXX Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDEXX Laboratories has no effect on the direction of DexCom i.e., DexCom and IDEXX Laboratories go up and down completely randomly.

Pair Corralation between DexCom and IDEXX Laboratories

Assuming the 90 days horizon DexCom is expected to generate 1.06 times less return on investment than IDEXX Laboratories. In addition to that, DexCom is 1.42 times more volatile than IDEXX Laboratories. It trades about 0.12 of its total potential returns per unit of risk. IDEXX Laboratories is currently generating about 0.18 per unit of volatility. If you would invest  35,500  in IDEXX Laboratories on April 22, 2025 and sell it today you would earn a total of  9,060  from holding IDEXX Laboratories or generate 25.52% return on investment over 90 days.

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

DexCom Inc  vs.  IDEXX Laboratories

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 nearly fragile basic indicators, DexCom reported solid returns over the last few months and may actually be approaching a breakup point.

IDEXX Laboratories

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IDEXX Laboratories are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, IDEXX Laboratories reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DexCom and IDEXX Laboratories

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

The idea behind DexCom Inc and IDEXX Laboratories 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..