Correlation Between Cigna Corp and Health Catalyst

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

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

Diversification Opportunities for Cigna Corp and Health Catalyst

0.65

Correlation Coefficient

Cigna Corp  Health Catalyst

Poor diversification

The 3 months correlation between Cigna and Health is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cigna Corp and Health Catalyst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Catalyst 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 Health Catalyst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Catalyst has no effect on the direction of Cigna Corp i.e., Cigna Corp and Health Catalyst go up and down completely randomly.

Pair Corralation between Cigna Corp and Health Catalyst

Allowing for the 90-day total investment horizon Cigna Corp is expected to under-perform the Health Catalyst. But the stock apears to be less risky and, when comparing its historical volatility, Cigna Corp is 1.14 times less risky than Health Catalyst. The stock trades about -0.25 of its potential returns per unit of risk. The Health Catalyst is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest  834.00  in Health Catalyst on October 10, 2024 and sell it today you would lose (98.00) from holding Health Catalyst or give up 11.75% of portfolio value over 90 days.

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

Cigna Corp  vs.  Health Catalyst

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 February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Health Catalyst

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Health Catalyst has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Cigna Corp and Health Catalyst

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

The idea behind Cigna Corp and Health Catalyst 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.