Correlation Between Centene Corp and Cigna Corp
Can any of the company-specific risk be diversified away by investing in both Centene Corp and Cigna Corp 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 Centene Corp and Cigna Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centene Corp and Cigna Corp, you can compare the effects of market volatilities on Centene Corp and Cigna Corp 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 Centene Corp with a short position of Cigna Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centene Corp and Cigna Corp.
Diversification Opportunities for Centene Corp and Cigna Corp
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Centene and Cigna is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Centene Corp and Cigna Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cigna Corp and Centene 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 Centene Corp are associated (or correlated) with Cigna Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cigna Corp has no effect on the direction of Centene Corp i.e., Centene Corp and Cigna Corp go up and down completely randomly.
Pair Corralation between Centene Corp and Cigna Corp
Considering the 90-day investment horizon Centene Corp is expected to under-perform the Cigna Corp. In addition to that, Centene Corp is 1.07 times more volatile than Cigna Corp. It trades about -0.01 of its total potential returns per unit of risk. Cigna Corp is currently generating about 0.05 per unit of volatility. If you would invest 25,602 in Cigna Corp on August 27, 2024 and sell it today you would earn a total of 7,243 from holding Cigna Corp or generate 28.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centene Corp vs. Cigna Corp
Performance |
| Timeline |
| Centene Corp |
| Cigna Corp |
Centene Corp and Cigna Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centene Corp and Cigna Corp
The main advantage of trading using opposite Centene Corp and Cigna Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centene Corp position performs unexpectedly, Cigna Corp 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 Cigna Corp will offset losses from the drop in Cigna Corp's long position.| Centene Corp vs. Humana Inc | Centene Corp vs. Elevance Health | Centene Corp vs. UnitedHealth Group Incorporated | Centene Corp vs. CVS Health Corp |
| Cigna Corp vs. Elevance Health | Cigna Corp vs. UnitedHealth Group Incorporated | Cigna Corp vs. Centene Corp | Cigna Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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