Correlation Between Cigna Corp and TransMedics
Can any of the company-specific risk be diversified away by investing in both Cigna Corp and TransMedics 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 TransMedics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cigna Corp and TransMedics Group, you can compare the effects of market volatilities on Cigna Corp and TransMedics 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 TransMedics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cigna Corp and TransMedics.
Diversification Opportunities for Cigna Corp and TransMedics
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cigna and TransMedics is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Cigna Corp and TransMedics Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransMedics Group 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 TransMedics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransMedics Group has no effect on the direction of Cigna Corp i.e., Cigna Corp and TransMedics go up and down completely randomly.
Pair Corralation between Cigna Corp and TransMedics
Allowing for the 90-day total investment horizon Cigna Corp is expected to generate 1.66 times less return on investment than TransMedics. But when comparing it to its historical volatility, Cigna Corp is 2.77 times less risky than TransMedics. It trades about 0.05 of its potential returns per unit of risk. TransMedics Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 7,546 in TransMedics Group on August 31, 2024 and sell it today you would earn a total of 1,165 from holding TransMedics Group or generate 15.44% 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. TransMedics Group
Performance |
| Timeline |
| Cigna Corp |
| TransMedics Group |
Cigna Corp and TransMedics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cigna Corp and TransMedics
The main advantage of trading using opposite Cigna Corp and TransMedics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cigna Corp position performs unexpectedly, TransMedics 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 TransMedics will offset losses from the drop in TransMedics' long position.| Cigna Corp vs. Elevance Health | Cigna Corp vs. UnitedHealth Group Incorporated | Cigna Corp vs. Centene Corp | Cigna Corp vs. Molina Healthcare |
| TransMedics vs. Inspire Medical Systems | TransMedics vs. Inari Medical | TransMedics vs. InMode | TransMedics vs. Insulet |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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