Correlation Between UnitedHealth Group and Cigna
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group 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 UnitedHealth Group and Cigna 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, you can compare the effects of market volatilities on UnitedHealth Group 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 UnitedHealth Group with a short position of Cigna. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Cigna.
Diversification Opportunities for UnitedHealth Group and Cigna
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between UnitedHealth and Cigna is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and Cigna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cigna 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. 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 UnitedHealth Group i.e., UnitedHealth Group and Cigna go up and down completely randomly.
Pair Corralation between UnitedHealth Group and Cigna
Assuming the 90 days trading horizon UnitedHealth Group Incorporated is expected to generate 2.4 times more return on investment than Cigna. However, UnitedHealth Group is 2.4 times more volatile than Cigna. It trades about 0.21 of its potential returns per unit of risk. Cigna is currently generating about 0.19 per unit of risk. If you would invest 4,625 in UnitedHealth Group Incorporated on August 28, 2024 and sell it today you would earn a total of 396.00 from holding UnitedHealth Group Incorporated or generate 8.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UnitedHealth Group Incorporate vs. Cigna
Performance |
| Timeline |
| UnitedHealth Group |
| Cigna |
UnitedHealth Group and Cigna Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and Cigna
The main advantage of trading using opposite UnitedHealth Group and Cigna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group 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.| UnitedHealth Group vs. Qualicorp Consultoria e | UnitedHealth Group vs. Fras le SA | UnitedHealth Group vs. Western Digital | UnitedHealth Group vs. Clave Indices De |
| Cigna vs. Qualicorp Consultoria e | Cigna vs. Fras le SA | Cigna vs. Western Digital | Cigna vs. Clave Indices De |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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