Correlation Between Cigna Corp and Smith Nephew
Can any of the company-specific risk be diversified away by investing in both Cigna Corp and Smith Nephew 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 Smith Nephew into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cigna Corp and Smith Nephew SNATS, you can compare the effects of market volatilities on Cigna Corp and Smith Nephew 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 Smith Nephew. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cigna Corp and Smith Nephew.
Diversification Opportunities for Cigna Corp and Smith Nephew
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cigna and Smith is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Cigna Corp and Smith Nephew SNATS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith Nephew SNATS 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 Smith Nephew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith Nephew SNATS has no effect on the direction of Cigna Corp i.e., Cigna Corp and Smith Nephew go up and down completely randomly.
Pair Corralation between Cigna Corp and Smith Nephew
Allowing for the 90-day total investment horizon Cigna Corp is expected to generate 2.09 times less return on investment than Smith Nephew. But when comparing it to its historical volatility, Cigna Corp is 1.24 times less risky than Smith Nephew. It trades about 0.01 of its potential returns per unit of risk. Smith Nephew SNATS is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,527 in Smith Nephew SNATS on September 2, 2024 and sell it today you would earn a total of 51.00 from holding Smith Nephew SNATS or generate 2.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cigna Corp vs. Smith Nephew SNATS
Performance |
| Timeline |
| Cigna Corp |
| Smith Nephew SNATS |
Cigna Corp and Smith Nephew Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cigna Corp and Smith Nephew
The main advantage of trading using opposite Cigna Corp and Smith Nephew positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cigna Corp position performs unexpectedly, Smith Nephew 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 Smith Nephew will offset losses from the drop in Smith Nephew's long position.| Cigna Corp vs. Elevance Health | Cigna Corp vs. UnitedHealth Group Incorporated | Cigna Corp vs. Centene Corp | Cigna Corp vs. Molina Healthcare |
| Smith Nephew vs. CochLear Ltd ADR | Smith Nephew vs. Integer Holdings Corp | Smith Nephew vs. Orthofix Medical | Smith Nephew vs. Glaukos Corp |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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