Correlation Between Cigna Corp and CVS Health
Can any of the company-specific risk be diversified away by investing in both Cigna Corp and CVS Health 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 Cigna Corp and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cigna Corp and CVS Health Corp, you can compare the effects of market volatilities on Cigna Corp and CVS Health 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 Cigna Corp with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cigna Corp and CVS Health.
Diversification Opportunities for Cigna Corp and CVS Health
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cigna and CVS is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Cigna Corp and CVS Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health Corp and Cigna Corp 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 Cigna Corp are associated (or correlated) with CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health Corp has no effect on the direction of Cigna Corp i.e., Cigna Corp and CVS Health go up and down completely randomly.
Pair Corralation between Cigna Corp and CVS Health
Allowing for the 90-day total investment horizon Cigna Corp is expected to generate 0.52 times more return on investment than CVS Health. However, Cigna Corp is 1.91 times less risky than CVS Health. It trades about 0.08 of its potential returns per unit of risk. CVS Health Corp is currently generating about -0.14 per unit of risk. If you would invest 33,993 in Cigna Corp on January 20, 2024 and sell it today you would earn a total of 885.00 from holding Cigna Corp or generate 2.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Cigna Corp vs. CVS Health Corp
Performance |
| Timeline |
| Cigna Corp |
| CVS Health Corp |
Cigna Corp and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cigna Corp and CVS Health
The main advantage of trading using opposite Cigna Corp and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cigna Corp position performs unexpectedly, CVS Health 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 CVS Health will offset losses from the drop in CVS Health's long position.| Cigna Corp vs. Certara | Cigna Corp vs. HealthStream | Cigna Corp vs. Evolent Health | Cigna Corp vs. Streamline Health Solutions |
| CVS Health vs. Certara | CVS Health vs. HealthStream | CVS Health vs. Evolent Health | CVS Health vs. Streamline Health Solutions |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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