Correlation Between Anthem and Cigna

Can any of the company-specific risk be diversified away by investing in both Anthem 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 Anthem and Cigna into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Anthem Inc and Cigna, you can compare the effects of market volatilities on Anthem 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 Anthem with a short position of Cigna. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anthem and Cigna.

Diversification Opportunities for Anthem and Cigna

0.83

Correlation Coefficient

Anthem  Cigna

Very poor diversification

The 3 months correlation between Anthem and Cigna is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Anthem Inc and Cigna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cigna and Anthem 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 Anthem Inc 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 Anthem i.e., Anthem and Cigna go up and down completely randomly.

Pair Corralation between Anthem and Cigna

Assuming the 90 days horizon Anthem Inc is expected to under-perform the Cigna. In addition to that, Anthem is 1.65 times more volatile than Cigna. It trades about -0.2 of its total potential returns per unit of risk. Cigna is currently generating about -0.11 per unit of volatility. If you would invest  28,936  in Cigna on April 22, 2025 and sell it today you would lose (3,651) from holding Cigna or give up 12.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Anthem Inc  vs.  Cigna

Anthem Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Anthem Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Cigna

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cigna has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Anthem and Cigna

The main advantage of trading using opposite Anthem and Cigna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anthem 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.

The idea behind Anthem Inc and Cigna pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.