Correlation Between Magellan Health and Cigna Corp

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Can any of the company-specific risk be diversified away by investing in both Magellan Health and Cigna Corp 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 Magellan Health and Cigna Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magellan Health and Cigna Corp, you can compare the effects of market volatilities on Magellan Health and Cigna Corp 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 Magellan Health with a short position of Cigna Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Health and Cigna Corp.

Diversification Opportunities for Magellan Health and Cigna Corp

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Magellan and Cigna is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Health and Cigna Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cigna Corp and Magellan Health 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 Magellan Health are associated (or correlated) with Cigna Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cigna Corp has no effect on the direction of Magellan Health i.e., Magellan Health and Cigna Corp go up and down completely randomly.

Pair Corralation between Magellan Health and Cigna Corp

If you would invest  33,374  in Cigna Corp on December 30, 2023 and sell it today you would earn a total of  2,945  from holding Cigna Corp or generate 8.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Magellan Health  vs.  Cigna Corp

 Performance 
       Timeline  
Magellan Health 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Magellan Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Magellan Health is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
Cigna Corp 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Cigna Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Cigna Corp demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Magellan Health and Cigna Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Magellan Health and Cigna Corp

The main advantage of trading using opposite Magellan Health and Cigna Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Health position performs unexpectedly, Cigna Corp 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 Cigna Corp will offset losses from the drop in Cigna Corp's long position.
The idea behind Magellan Health and Cigna Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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