Correlation Between Cigna Corp and Brookdale Senior
Can any of the company-specific risk be diversified away by investing in both Cigna Corp and Brookdale Senior 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 Brookdale Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cigna Corp and Brookdale Senior Living, you can compare the effects of market volatilities on Cigna Corp and Brookdale Senior 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 Brookdale Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cigna Corp and Brookdale Senior.
Diversification Opportunities for Cigna Corp and Brookdale Senior
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cigna and Brookdale is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Cigna Corp and Brookdale Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookdale Senior Living 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 Brookdale Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookdale Senior Living has no effect on the direction of Cigna Corp i.e., Cigna Corp and Brookdale Senior go up and down completely randomly.
Pair Corralation between Cigna Corp and Brookdale Senior
Allowing for the 90-day total investment horizon Cigna Corp is expected to generate 0.59 times more return on investment than Brookdale Senior. However, Cigna Corp is 1.71 times less risky than Brookdale Senior. It trades about 0.17 of its potential returns per unit of risk. Brookdale Senior Living is currently generating about -0.16 per unit of risk. If you would invest 31,232 in Cigna Corp on September 5, 2024 and sell it today you would earn a total of 2,258 from holding Cigna Corp or generate 7.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cigna Corp vs. Brookdale Senior Living
Performance |
| Timeline |
| Cigna Corp |
| Brookdale Senior Living |
Cigna Corp and Brookdale Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cigna Corp and Brookdale Senior
The main advantage of trading using opposite Cigna Corp and Brookdale Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cigna Corp position performs unexpectedly, Brookdale Senior 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 Brookdale Senior will offset losses from the drop in Brookdale Senior's long position.| Cigna Corp vs. Humana Inc | Cigna Corp vs. Elevance Health | Cigna Corp vs. UnitedHealth Group Incorporated | Cigna Corp vs. Molina Healthcare |
| Brookdale Senior vs. Humana Inc | Brookdale Senior vs. Elevance Health | Brookdale Senior vs. UnitedHealth Group Incorporated | Brookdale Senior 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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