Correlation Between Cigna Corp and Masimo

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

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

Diversification Opportunities for Cigna Corp and Masimo

0.07

Correlation Coefficient

Cigna Corp  Masimo

Significant diversification

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

Pair Corralation between Cigna Corp and Masimo

Allowing for the 90-day total investment horizon Cigna Corp is expected to generate 0.67 times more return on investment than Masimo. However, Cigna Corp is 1.5 times less risky than Masimo. It trades about 0.17 of its potential returns per unit of risk. Masimo is currently generating about 0.01 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  5,095  from holding Cigna Corp or generate 18.61% 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.  Masimo

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.

Masimo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Masimo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Masimo is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Cigna Corp and Masimo

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

The idea behind Cigna Corp and Masimo 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.