Correlation Between Cigna Corp and Treace Medical

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

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

Diversification Opportunities for Cigna Corp and Treace Medical

-0.28

Correlation Coefficient

Cigna Corp  Treace Medical

Very good diversification

The 3 months correlation between Cigna and Treace is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Cigna Corp and Treace Medical Concepts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treace Medical Concepts 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 Treace Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treace Medical Concepts has no effect on the direction of Cigna Corp i.e., Cigna Corp and Treace Medical go up and down completely randomly.

Pair Corralation between Cigna Corp and Treace Medical

Allowing for the 90-day total investment horizon Cigna Corp is expected to generate 0.33 times more return on investment than Treace Medical. However, Cigna Corp is 3.07 times less risky than Treace Medical. It trades about 0.0 of its potential returns per unit of risk. Treace Medical Concepts is currently generating about -0.01 per unit of risk. If you would invest  31,062  in Cigna Corp on September 24, 2024 and sell it today you would lose (3,370) from holding Cigna Corp or give up 10.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Cigna Corp  vs.  Treace Medical Concepts

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

Treace Medical Concepts

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Treace Medical Concepts are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental indicators, Treace Medical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cigna Corp and Treace Medical

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

The idea behind Cigna Corp and Treace Medical Concepts 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.