Correlation Between US Physicalrapy and Cigna Corp

Can any of the company-specific risk be diversified away by investing in both US Physicalrapy 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 US Physicalrapy and Cigna Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between US Physicalrapy and Cigna Corp, you can compare the effects of market volatilities on US Physicalrapy 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 US Physicalrapy with a short position of Cigna Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Physicalrapy and Cigna Corp.

Diversification Opportunities for US Physicalrapy and Cigna Corp

0.73

Correlation Coefficient

US Physicalrapy  Cigna Corp

Poor diversification

The 3 months correlation between USPH and Cigna is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding US Physicalrapy and Cigna Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cigna Corp and US Physicalrapy 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 US Physicalrapy 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 US Physicalrapy i.e., US Physicalrapy and Cigna Corp go up and down completely randomly.

Pair Corralation between US Physicalrapy and Cigna Corp

Given the investment horizon of 90 days US Physicalrapy is expected to generate 1.56 times less return on investment than Cigna Corp. In addition to that, US Physicalrapy is 1.06 times more volatile than Cigna Corp. It trades about 0.02 of its total potential returns per unit of risk. Cigna Corp is currently generating about 0.04 per unit of volatility. If you would invest  29,199  in Cigna Corp on February 7, 2024 and sell it today you would earn a total of  5,042  from holding Cigna Corp or generate 17.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

US Physicalrapy  vs.  Cigna Corp

US Physicalrapy

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in US Physicalrapy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, US Physicalrapy demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Cigna Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cigna Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Cigna Corp is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with US Physicalrapy and Cigna Corp

The main advantage of trading using opposite US Physicalrapy and Cigna Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Physicalrapy 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 US Physicalrapy 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.