Correlation Between Cigna Corp and Alignment Healthcare

Can any of the company-specific risk be diversified away by investing in both Cigna Corp and Alignment 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 Alignment 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 Alignment Healthcare LLC, you can compare the effects of market volatilities on Cigna Corp and Alignment 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 Alignment Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cigna Corp and Alignment Healthcare.

Diversification Opportunities for Cigna Corp and Alignment Healthcare

0.07

Correlation Coefficient

Cigna Corp  Alignment Healthcare

Significant diversification

The 3 months correlation between Cigna and Alignment is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Cigna Corp and Alignment Healthcare LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alignment Healthcare LLC 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 Alignment Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alignment Healthcare LLC has no effect on the direction of Cigna Corp i.e., Cigna Corp and Alignment Healthcare go up and down completely randomly.

Pair Corralation between Cigna Corp and Alignment Healthcare

Allowing for the 90-day total investment horizon Cigna Corp is expected to under-perform the Alignment Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Cigna Corp is 1.45 times less risky than Alignment Healthcare. The stock trades about -0.04 of its potential returns per unit of risk. The Alignment Healthcare LLC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,261  in Alignment Healthcare LLC on November 28, 2024 and sell it today you would earn a total of  102.00  from holding Alignment Healthcare LLC or generate 8.09% return on investment over 90 days.

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

Cigna Corp  vs.  Alignment Healthcare LLC

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.

Alignment Healthcare LLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alignment Healthcare LLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical indicators, Alignment Healthcare may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Cigna Corp and Alignment Healthcare

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

The idea behind Cigna Corp and Alignment Healthcare LLC 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.

Check out your portfolio center.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.