Correlation Between UnitedHealth Group and Cigna Corp
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group 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 UnitedHealth Group and Cigna Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UnitedHealth Group Incorporated and Cigna Corp, you can compare the effects of market volatilities on UnitedHealth Group 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 UnitedHealth Group with a short position of Cigna Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Cigna Corp.
Diversification Opportunities for UnitedHealth Group and Cigna Corp
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between UnitedHealth and Cigna is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and Cigna Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cigna Corp and UnitedHealth Group 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 UnitedHealth Group Incorporated 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 UnitedHealth Group i.e., UnitedHealth Group and Cigna Corp go up and down completely randomly.
Pair Corralation between UnitedHealth Group and Cigna Corp
Considering the 90-day investment horizon UnitedHealth Group Incorporated is expected to generate 0.91 times more return on investment than Cigna Corp. However, UnitedHealth Group Incorporated is 1.1 times less risky than Cigna Corp. It trades about 0.15 of its potential returns per unit of risk. Cigna Corp is currently generating about 0.1 per unit of risk. If you would invest 56,464 in UnitedHealth Group Incorporated on August 24, 2024 and sell it today you would earn a total of 3,285 from holding UnitedHealth Group Incorporated or generate 5.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UnitedHealth Group Incorporate vs. Cigna Corp
Performance |
| Timeline |
| UnitedHealth Group |
| Cigna Corp |
UnitedHealth Group and Cigna Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and Cigna Corp
The main advantage of trading using opposite UnitedHealth Group and Cigna Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group 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.| UnitedHealth Group vs. Cigna Corp | UnitedHealth Group vs. Humana Inc | UnitedHealth Group vs. Elevance Health | UnitedHealth Group vs. Centene 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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