Correlation Between Cigna Corp and Hewlett Packard

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

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

Diversification Opportunities for Cigna Corp and Hewlett Packard

0.66

Correlation Coefficient

Cigna Corp  Hewlett Packard

Poor diversification

The 3 months correlation between Cigna and Hewlett is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Cigna Corp and Hewlett Packard Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hewlett Packard Ente 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 Hewlett Packard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hewlett Packard Ente has no effect on the direction of Cigna Corp i.e., Cigna Corp and Hewlett Packard go up and down completely randomly.

Pair Corralation between Cigna Corp and Hewlett Packard

Allowing for the 90-day total investment horizon Cigna Corp is expected to generate 0.93 times more return on investment than Hewlett Packard. However, Cigna Corp is 1.08 times less risky than Hewlett Packard. It trades about 0.08 of its potential returns per unit of risk. Hewlett Packard Enterprise is currently generating about 0.05 per unit of risk. If you would invest  24,919  in Cigna Corp on January 20, 2024 and sell it today you would earn a total of  9,959  from holding Cigna Corp or generate 39.97% return on investment over 90 days.

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

Cigna Corp  vs.  Hewlett Packard Enterprise

Cigna Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cigna Corp are ranked lower than 16 (%) 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.

Hewlett Packard Ente

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hewlett Packard Enterprise are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Hewlett Packard may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Cigna Corp and Hewlett Packard

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

The idea behind Cigna Corp and Hewlett Packard Enterprise 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.