Correlation Between Cigna Corp and Vroom

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

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

Diversification Opportunities for Cigna Corp and Vroom

-0.57

Correlation Coefficient

Cigna Corp  Vroom

Excellent diversification

The 3 months correlation between Cigna and Vroom is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Cigna Corp and Vroom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vroom 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 Vroom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vroom Inc has no effect on the direction of Cigna Corp i.e., Cigna Corp and Vroom go up and down completely randomly.

Pair Corralation between Cigna Corp and Vroom

Allowing for the 90-day total investment horizon Cigna Corp is expected to under-perform the Vroom. But the stock apears to be less risky and, when comparing its historical volatility, Cigna Corp is 3.9 times less risky than Vroom. The stock trades about -0.24 of its potential returns per unit of risk. The Vroom Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,261  in Vroom Inc on February 6, 2024 and sell it today you would earn a total of  23.00  from holding Vroom Inc or generate 1.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Cigna Corp  vs.  Vroom Inc

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.

Vroom Inc

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vroom Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Vroom displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cigna Corp and Vroom

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

The idea behind Cigna Corp and Vroom 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.