Correlation Between Cigna Corp and Stryker
Can any of the company-specific risk be diversified away by investing in both Cigna Corp and Stryker 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 Stryker into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cigna Corp and Stryker, you can compare the effects of market volatilities on Cigna Corp and Stryker 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 Stryker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cigna Corp and Stryker.
Diversification Opportunities for Cigna Corp and Stryker
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cigna and Stryker is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cigna Corp and Stryker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stryker 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 Stryker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stryker has no effect on the direction of Cigna Corp i.e., Cigna Corp and Stryker go up and down completely randomly.
Pair Corralation between Cigna Corp and Stryker
Allowing for the 90-day total investment horizon Cigna Corp is expected to generate 0.58 times more return on investment than Stryker. However, Cigna Corp is 1.72 times less risky than Stryker. It trades about -0.1 of its potential returns per unit of risk. Stryker is currently generating about -0.14 per unit of risk. If you would invest 35,773 in Cigna Corp on January 26, 2024 and sell it today you would lose (545.00) from holding Cigna Corp or give up 1.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cigna Corp vs. Stryker
Performance |
| Timeline |
| Cigna Corp |
| Stryker |
Cigna Corp and Stryker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cigna Corp and Stryker
The main advantage of trading using opposite Cigna Corp and Stryker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cigna Corp position performs unexpectedly, Stryker 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 Stryker will offset losses from the drop in Stryker's long position.The idea behind Cigna Corp and Stryker 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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