Correlation Between CVS Health and Cigna Corp

Specify exactly 2 symbols:
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 is expected to generate 1.67 times less return on investment than Cigna Corp. But when comparing it to its historical volatility, CVS Health Corp is 1.03 times less risky than Cigna Corp. It trades about 0.22 of its potential returns per unit of risk. Cigna Corp is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  33,932  in Cigna Corp on December 29, 2023 and sell it today you would earn a total of  2,402  from holding Cigna Corp or generate 7.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

CVS Health Corp  vs.  Cigna Corp

 Performance 
       Timeline  
CVS Health Corp 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in CVS Health Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CVS Health is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
Cigna Corp 

Risk-Adjusted Performance

20 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Cigna Corp are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Cigna Corp demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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.
The idea behind CVS Health Corp 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

Other Complementary Tools

Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Equity Valuation
Check real value of public entities based on technical and fundamental data
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine