Correlation Between Cedar Realty and CIGNA

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

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

Diversification Opportunities for Cedar Realty and CIGNA

0.58

Correlation Coefficient

Cedar Realty  CIGNA

Very weak diversification

The 3 months correlation between Cedar and CIGNA is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Cedar Realty Trust and CIGNA P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIGNA P and Cedar Realty 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 Cedar Realty Trust 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 P has no effect on the direction of Cedar Realty i.e., Cedar Realty and CIGNA go up and down completely randomly.

Pair Corralation between Cedar Realty and CIGNA

Assuming the 90 days trading horizon Cedar Realty Trust is expected to generate 4.94 times more return on investment than CIGNA. However, Cedar Realty is 4.94 times more volatile than CIGNA P. It trades about 0.09 of its potential returns per unit of risk. CIGNA P is currently generating about 0.1 per unit of risk. If you would invest  1,524  in Cedar Realty Trust on December 23, 2024 and sell it today you would earn a total of  217.00  from holding Cedar Realty Trust or generate 14.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.08%
Values	Daily Returns

Cedar Realty Trust  vs.  CIGNA P

Cedar Realty Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cedar Realty Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cedar Realty sustained solid returns over the last few months and may actually be approaching a breakup point.

CIGNA P

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CIGNA P are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CIGNA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cedar Realty and CIGNA

The main advantage of trading using opposite Cedar Realty and CIGNA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cedar Realty 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 Cedar Realty Trust and CIGNA P 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.