Correlation Between Laboratory and Cigna Corp

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

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

Diversification Opportunities for Laboratory and Cigna Corp

-0.66

Correlation Coefficient

Laboratory  Cigna Corp

Excellent diversification

The 3 months correlation between Laboratory and Cigna is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Laboratory of and Cigna Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cigna Corp and Laboratory 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 Laboratory of 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 Laboratory i.e., Laboratory and Cigna Corp go up and down completely randomly.

Pair Corralation between Laboratory and Cigna Corp

Allowing for the 90-day total investment horizon Laboratory of is expected to under-perform the Cigna Corp. In addition to that, Laboratory is 2.2 times more volatile than Cigna Corp. It trades about -0.3 of its total potential returns per unit of risk. Cigna Corp is currently generating about -0.21 per unit of volatility. If you would invest  36,408  in Cigna Corp on January 29, 2024 and sell it today you would lose (961.00) from holding Cigna Corp or give up 2.64% of portfolio value over 90 days.

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

Laboratory of  vs.  Cigna Corp

Laboratory

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Laboratory of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Cigna Corp

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cigna Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal forward indicators, Cigna Corp demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Laboratory and Cigna Corp

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

The idea behind Laboratory of and Cigna Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.