Correlation Between Cigna Corp and Pennant

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

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

Diversification Opportunities for Cigna Corp and Pennant

0.45

Correlation Coefficient

Cigna Corp  Pennant

Very weak diversification

The 3 months correlation between Cigna and Pennant is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Cigna Corp and Pennant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pennant Group 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 Pennant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pennant Group has no effect on the direction of Cigna Corp i.e., Cigna Corp and Pennant go up and down completely randomly.

Pair Corralation between Cigna Corp and Pennant

Allowing for the 90-day total investment horizon Cigna Corp is expected to generate 14.04 times less return on investment than Pennant. But when comparing it to its historical volatility, Cigna Corp is 1.69 times less risky than Pennant. It trades about 0.01 of its potential returns per unit of risk. Pennant Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,019  in Pennant Group on September 2, 2024 and sell it today you would earn a total of  2,099  from holding Pennant Group or generate 205.99% return on investment over 90 days.

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

Cigna Corp  vs.  Pennant Group

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 latest abnormal performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pennant Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pennant Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Pennant is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cigna Corp and Pennant

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

The idea behind Cigna Corp and Pennant Group 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.