Correlation Between Cigna Corp and National HealthCare

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

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

Diversification Opportunities for Cigna Corp and National HealthCare

-0.54

Correlation Coefficient

Cigna Corp  National HealthCare

Excellent diversification

The 3 months correlation between Cigna and National is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Cigna Corp and National HealthCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National HealthCare and Cigna 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 Cigna Corp are associated (or correlated) with National HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National HealthCare has no effect on the direction of Cigna Corp i.e., Cigna Corp and National HealthCare go up and down completely randomly.

Pair Corralation between Cigna Corp and National HealthCare

Allowing for the 90-day total investment horizon Cigna Corp is expected to under-perform the National HealthCare. But the stock apears to be less risky and, when comparing its historical volatility, Cigna Corp is 1.05 times less risky than National HealthCare. The stock trades about -0.01 of its potential returns per unit of risk. The National HealthCare is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  9,064  in National HealthCare on March 20, 2025 and sell it today you would earn a total of  1,540  from holding National HealthCare or generate 16.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Cigna Corp  vs.  National HealthCare

Cigna Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cigna Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Cigna Corp is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

National HealthCare

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in National HealthCare are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical indicators, National HealthCare exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cigna Corp and National HealthCare

The main advantage of trading using opposite Cigna Corp and National HealthCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cigna Corp position performs unexpectedly, National HealthCare 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 National HealthCare will offset losses from the drop in National HealthCare's long position.

The idea behind Cigna Corp and National HealthCare 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.