Correlation Between Basic Materials and Cigna
Can any of the company-specific risk be diversified away by investing in both Basic Materials and Cigna 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 Basic Materials and Cigna into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basic Materials and Cigna, you can compare the effects of market volatilities on Basic Materials and Cigna 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 Basic Materials with a short position of Cigna. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Materials and Cigna.
Diversification Opportunities for Basic Materials and Cigna
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Basic and Cigna is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Basic Materials and Cigna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cigna and Basic Materials 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 Basic Materials are associated (or correlated) with Cigna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cigna has no effect on the direction of Basic Materials i.e., Basic Materials and Cigna go up and down completely randomly.
Pair Corralation between Basic Materials and Cigna
Assuming the 90 days trading horizon Basic Materials is expected to generate 16.28 times less return on investment than Cigna. But when comparing it to its historical volatility, Basic Materials is 1.68 times less risky than Cigna. It trades about 0.01 of its potential returns per unit of risk. Cigna is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 31,276 in Cigna on September 2, 2024 and sell it today you would earn a total of 19,112 from holding Cigna or generate 61.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 80.32% |
| Values | Daily Returns |
Basic Materials vs. Cigna
Performance |
| Timeline |
Basic Materials and Cigna Volatility Contrast
Predicted Return Density |
| Returns |
Basic Materials
Pair trading matchups for Basic Materials
Cigna
Pair trading matchups for Cigna
Pair Trading with Basic Materials and Cigna
The main advantage of trading using opposite Basic Materials and Cigna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basic Materials position performs unexpectedly, Cigna 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 will offset losses from the drop in Cigna's long position.| Basic Materials vs. Uber Technologies | Basic Materials vs. Palantir Technologies | Basic Materials vs. Marvell Technology | Basic Materials vs. Align Technology |
| Cigna vs. Spotify Technology SA | Cigna vs. Extra Space Storage | Cigna vs. Broadcom | Cigna vs. Bemobi Mobile Tech |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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