Correlation Between Bone Biologics and Cigna Corp

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

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

Diversification Opportunities for Bone Biologics and Cigna Corp

0.64

Correlation Coefficient

Bone Biologics  Cigna Corp

Poor diversification

The 3 months correlation between Bone and Cigna is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Bone Biologics Corp and Cigna Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cigna Corp and Bone Biologics 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 Bone Biologics Corp 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 Bone Biologics i.e., Bone Biologics and Cigna Corp go up and down completely randomly.

Pair Corralation between Bone Biologics and Cigna Corp

Given the investment horizon of 90 days Bone Biologics Corp is expected to under-perform the Cigna Corp. In addition to that, Bone Biologics is 1.21 times more volatile than Cigna Corp. It trades about -0.43 of its total potential returns per unit of risk. Cigna Corp is currently generating about -0.36 per unit of volatility. If you would invest  33,162  in Cigna Corp on September 24, 2024 and sell it today you would lose (5,470) from holding Cigna Corp or give up 16.49% of portfolio value over 90 days.

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

Bone Biologics Corp  vs.  Cigna Corp

Bone Biologics Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Cigna Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cigna Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Bone Biologics and Cigna Corp

The main advantage of trading using opposite Bone Biologics and Cigna Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bone Biologics 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 Bone Biologics Corp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.