Correlation Between Cigna Corp and P3 Health
Can any of the company-specific risk be diversified away by investing in both Cigna Corp and P3 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 P3 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 P3 Health Partners, you can compare the effects of market volatilities on Cigna Corp and P3 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 P3 Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cigna Corp and P3 Health.
Diversification Opportunities for Cigna Corp and P3 Health
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cigna and PIII is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Cigna Corp and P3 Health Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on P3 Health Partners 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 P3 Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of P3 Health Partners has no effect on the direction of Cigna Corp i.e., Cigna Corp and P3 Health go up and down completely randomly.
Pair Corralation between Cigna Corp and P3 Health
Allowing for the 90-day total investment horizon Cigna Corp is expected to under-perform the P3 Health. But the stock apears to be less risky and, when comparing its historical volatility, Cigna Corp is 2.24 times less risky than P3 Health. The stock trades about -0.36 of its potential returns per unit of risk. The P3 Health Partners is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 21.00 in P3 Health Partners on September 25, 2024 and sell it today you would lose (2.00) from holding P3 Health Partners or give up 9.52% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Cigna Corp vs. P3 Health Partners
Performance |
Timeline |
Cigna Corp |
P3 Health Partners |
Cigna Corp and P3 Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cigna Corp and P3 Health
The main advantage of trading using opposite Cigna Corp and P3 Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cigna Corp position performs unexpectedly, P3 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 P3 Health will offset losses from the drop in P3 Health's long position.Cigna Corp vs. Definitive Healthcare Corp | Cigna Corp vs. Edwards Lifesciences Corp | Cigna Corp vs. Outset Medical | Cigna Corp vs. Doximity |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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