Correlation Between Central Garden and Cigna Corp
Can any of the company-specific risk be diversified away by investing in both Central Garden 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 Central Garden and Cigna Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Garden Pet and Cigna Corp, you can compare the effects of market volatilities on Central Garden 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 Central Garden with a short position of Cigna Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Garden and Cigna Corp.
Diversification Opportunities for Central Garden and Cigna Corp
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Central and Cigna is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Central Garden Pet and Cigna Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cigna Corp and Central Garden 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 Central Garden Pet 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 Central Garden i.e., Central Garden and Cigna Corp go up and down completely randomly.
Pair Corralation between Central Garden and Cigna Corp
Assuming the 90 days horizon Central Garden Pet is expected to generate 0.85 times more return on investment than Cigna Corp. However, Central Garden Pet is 1.18 times less risky than Cigna Corp. It trades about 0.21 of its potential returns per unit of risk. Cigna Corp is currently generating about -0.13 per unit of risk. If you would invest 2,881 in Central Garden Pet on September 22, 2024 and sell it today you would earn a total of 501.00 from holding Central Garden Pet or generate 17.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Garden Pet vs. Cigna Corp
Performance |
| Timeline |
| Central Garden Pet |
| Cigna Corp |
Central Garden and Cigna Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Garden and Cigna Corp
The main advantage of trading using opposite Central Garden and Cigna Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Garden 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.| Central Garden vs. Seneca Foods Corp | Central Garden vs. Natures Sunshine Products | Central Garden vs. J J Snack | Central Garden vs. Central Garden Pet |
| Cigna Corp vs. Elevance Health | Cigna Corp vs. UnitedHealth Group Incorporated | Cigna Corp vs. Centene Corp | Cigna Corp vs. Molina Healthcare |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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