Correlation Between Cigna Corp and Humana
Can any of the company-specific risk be diversified away by investing in both Cigna Corp and Humana 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 Humana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cigna Corp and Humana Inc, you can compare the effects of market volatilities on Cigna Corp and Humana 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 Humana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cigna Corp and Humana.
Diversification Opportunities for Cigna Corp and Humana
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cigna and Humana is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cigna Corp and Humana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humana Inc 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 Humana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humana Inc has no effect on the direction of Cigna Corp i.e., Cigna Corp and Humana go up and down completely randomly.
Pair Corralation between Cigna Corp and Humana
Allowing for the 90-day total investment horizon Cigna Corp is expected to generate 0.23 times more return on investment than Humana. However, Cigna Corp is 4.43 times less risky than Humana. It trades about -0.05 of its potential returns per unit of risk. Humana Inc is currently generating about -0.07 per unit of risk. If you would invest 35,555 in Cigna Corp on January 25, 2024 and sell it today you would lose (290.00) from holding Cigna Corp or give up 0.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cigna Corp vs. Humana Inc
Performance |
| Timeline |
| Cigna Corp |
| Humana Inc |
Cigna Corp and Humana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cigna Corp and Humana
The main advantage of trading using opposite Cigna Corp and Humana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cigna Corp position performs unexpectedly, Humana 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 Humana will offset losses from the drop in Humana's long position.| Cigna Corp vs. Elevance Health | Cigna Corp vs. UnitedHealth Group Incorporated | Cigna Corp vs. Centene Corp | Cigna Corp vs. Molina Healthcare |
| Humana vs. Cigna Corp | Humana vs. Definitive Healthcare Corp | Humana vs. Edwards Lifesciences Corp | Humana vs. Guardant Health |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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