Correlation Between Cigna Corp and MetLife Preferred
Can any of the company-specific risk be diversified away by investing in both Cigna Corp and MetLife Preferred 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 MetLife Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cigna Corp and MetLife Preferred Stock, you can compare the effects of market volatilities on Cigna Corp and MetLife Preferred 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 MetLife Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cigna Corp and MetLife Preferred.
Diversification Opportunities for Cigna Corp and MetLife Preferred
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cigna and MetLife is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cigna Corp and MetLife Preferred Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife Preferred Stock 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 MetLife Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetLife Preferred Stock has no effect on the direction of Cigna Corp i.e., Cigna Corp and MetLife Preferred go up and down completely randomly.
Pair Corralation between Cigna Corp and MetLife Preferred
Allowing for the 90-day total investment horizon Cigna Corp is expected to generate 1.82 times more return on investment than MetLife Preferred. However, Cigna Corp is 1.82 times more volatile than MetLife Preferred Stock. It trades about 0.03 of its potential returns per unit of risk. MetLife Preferred Stock is currently generating about 0.02 per unit of risk. If you would invest 28,284 in Cigna Corp on September 1, 2024 and sell it today you would earn a total of 5,496 from holding Cigna Corp or generate 19.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cigna Corp vs. MetLife Preferred Stock
Performance |
| Timeline |
| Cigna Corp |
| MetLife Preferred Stock |
Cigna Corp and MetLife Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cigna Corp and MetLife Preferred
The main advantage of trading using opposite Cigna Corp and MetLife Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cigna Corp position performs unexpectedly, MetLife Preferred 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 MetLife Preferred will offset losses from the drop in MetLife Preferred's long position.| Cigna Corp vs. Elevance Health | Cigna Corp vs. UnitedHealth Group Incorporated | Cigna Corp vs. Centene Corp | Cigna Corp vs. Molina Healthcare |
| MetLife Preferred vs. MetLife Preferred Stock | MetLife Preferred vs. The Allstate | MetLife Preferred vs. The Allstate | MetLife Preferred vs. Wells Fargo |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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