Correlation Between CVS Health and Cigna Corp
Can any of the company-specific risk be diversified away by investing in both CVS 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 CVS 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 CVS Health Corp and Cigna Corp, you can compare the effects of market volatilities on CVS 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 CVS Health with a short position of Cigna Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Cigna Corp.
Diversification Opportunities for CVS Health and Cigna Corp
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between CVS and Cigna is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Cigna Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cigna Corp and CVS 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 CVS Health Corp 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 CVS Health i.e., CVS Health and Cigna Corp go up and down completely randomly.
Pair Corralation between CVS Health and Cigna Corp
Considering the 90-day investment horizon CVS Health Corp is expected to under-perform the Cigna Corp. But the stock apears to be less risky and, when comparing its historical volatility, CVS Health Corp is 1.09 times less risky than Cigna Corp. The stock trades about -0.04 of its potential returns per unit of risk. The Cigna Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 25,799 in Cigna Corp on January 26, 2024 and sell it today you would earn a total of 9,429 from holding Cigna Corp or generate 36.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 99.8% |
Values | Daily Returns |
CVS Health Corp vs. Cigna Corp
Performance |
Timeline |
CVS Health Corp |
Cigna Corp |
CVS Health and Cigna Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CVS Health and Cigna Corp
The main advantage of trading using opposite CVS Health and Cigna Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS 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.CVS Health vs. Humana Inc | CVS Health vs. Cigna Corp | CVS Health vs. Elevance Health | CVS Health vs. Centene Corp |
Cigna Corp vs. Elevance Health | Cigna Corp vs. UnitedHealth Group Incorporated | Cigna Corp vs. Centene Corp | Cigna Corp vs. Molina Healthcare |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |