Correlation Between Cigna Corp and Patterson Companies
Can any of the company-specific risk be diversified away by investing in both Cigna Corp and Patterson Companies 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 Patterson Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cigna Corp and Patterson Companies, you can compare the effects of market volatilities on Cigna Corp and Patterson Companies 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 Patterson Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cigna Corp and Patterson Companies.
Diversification Opportunities for Cigna Corp and Patterson Companies
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cigna and Patterson is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cigna Corp and Patterson Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patterson Companies 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 Patterson Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patterson Companies has no effect on the direction of Cigna Corp i.e., Cigna Corp and Patterson Companies go up and down completely randomly.
Pair Corralation between Cigna Corp and Patterson Companies
Allowing for the 90-day total investment horizon Cigna Corp is expected to under-perform the Patterson Companies. But the stock apears to be less risky and, when comparing its historical volatility, Cigna Corp is 4.89 times less risky than Patterson Companies. The stock trades about -0.33 of its potential returns per unit of risk. The Patterson Companies is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 2,000 in Patterson Companies on September 14, 2024 and sell it today you would earn a total of 1,098 from holding Patterson Companies or generate 54.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cigna Corp vs. Patterson Companies
Performance |
| Timeline |
| Cigna Corp |
| Patterson Companies |
Cigna Corp and Patterson Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cigna Corp and Patterson Companies
The main advantage of trading using opposite Cigna Corp and Patterson Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cigna Corp position performs unexpectedly, Patterson Companies 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 Patterson Companies will offset losses from the drop in Patterson Companies' long position.| Cigna Corp vs. Elevance Health | Cigna Corp vs. UnitedHealth Group Incorporated | Cigna Corp vs. Centene Corp | Cigna Corp vs. Molina Healthcare |
| Patterson Companies vs. Owens Minor | Patterson Companies vs. Cardinal Health | Patterson Companies vs. McKesson | Patterson Companies vs. Henry Schein |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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