Correlation Between Cigna Corp and BlackRock Health

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

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

Diversification Opportunities for Cigna Corp and BlackRock Health

0.31

Correlation Coefficient

Cigna Corp  BlackRock Health

Weak diversification

The 3 months correlation between Cigna and BlackRock is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cigna Corp and BlackRock Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Health Sciences 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 BlackRock Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Health Sciences has no effect on the direction of Cigna Corp i.e., Cigna Corp and BlackRock Health go up and down completely randomly.

Pair Corralation between Cigna Corp and BlackRock Health

Allowing for the 90-day total investment horizon Cigna Corp is expected to generate 1.37 times more return on investment than BlackRock Health. However, Cigna Corp is 1.37 times more volatile than BlackRock Health Sciences. It trades about 0.17 of its potential returns per unit of risk. BlackRock Health Sciences is currently generating about 0.09 per unit of risk. If you would invest  27,379  in Cigna Corp on December 28, 2024 and sell it today you would earn a total of  5,125  from holding Cigna Corp or generate 18.72% return on investment over 90 days.

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

Cigna Corp  vs.  BlackRock Health Sciences

Cigna Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cigna Corp are ranked lower than 13 (%) 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.

BlackRock Health Sciences

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Health Sciences are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, BlackRock Health may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Cigna Corp and BlackRock Health

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

The idea behind Cigna Corp and BlackRock Health Sciences 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.