Correlation Between Cigna Corp and Biovie

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

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

Diversification Opportunities for Cigna Corp and Biovie

0.09

Correlation Coefficient

Cigna Corp  Biovie

Significant diversification

The 3 months correlation between Cigna and Biovie is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Cigna Corp and Biovie Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biovie 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 Biovie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biovie Inc has no effect on the direction of Cigna Corp i.e., Cigna Corp and Biovie go up and down completely randomly.

Pair Corralation between Cigna Corp and Biovie

Allowing for the 90-day total investment horizon Cigna Corp is expected to generate 0.22 times more return on investment than Biovie. However, Cigna Corp is 4.58 times less risky than Biovie. It trades about 0.06 of its potential returns per unit of risk. Biovie Inc is currently generating about -0.08 per unit of risk. If you would invest  26,420  in Cigna Corp on March 12, 2024 and sell it today you would earn a total of  7,293  from holding Cigna Corp or generate 27.6% return on investment over 90 days.

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

Cigna Corp  vs.  Biovie Inc

Cigna Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cigna Corp has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Biovie Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biovie Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in July 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Cigna Corp and Biovie

The main advantage of trading using opposite Cigna Corp and Biovie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cigna Corp position performs unexpectedly, Biovie 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 Biovie will offset losses from the drop in Biovie's long position.

The idea behind Cigna Corp and Biovie Inc 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.