Correlation Between Cigna Corp and Viemed Healthcare

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

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

Diversification Opportunities for Cigna Corp and Viemed Healthcare

-0.73

Correlation Coefficient

Cigna Corp  Viemed Healthcare

Pay attention - limited upside

The 3 months correlation between Cigna and Viemed is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Cigna Corp and Viemed Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viemed Healthcare 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 Viemed Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viemed Healthcare has no effect on the direction of Cigna Corp i.e., Cigna Corp and Viemed Healthcare go up and down completely randomly.

Pair Corralation between Cigna Corp and Viemed Healthcare

Allowing for the 90-day total investment horizon Cigna Corp is expected to generate 1.04 times more return on investment than Viemed Healthcare. However, Cigna Corp is 1.04 times more volatile than Viemed Healthcare. It trades about 0.15 of its potential returns per unit of risk. Viemed Healthcare is currently generating about -0.11 per unit of risk. If you would invest  27,735  in Cigna Corp on December 27, 2024 and sell it today you would earn a total of  4,388  from holding Cigna Corp or generate 15.82% return on investment over 90 days.

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

Cigna Corp  vs.  Viemed Healthcare

Cigna Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cigna Corp are ranked lower than 11 (%) 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.

Viemed Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Viemed Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Cigna Corp and Viemed Healthcare

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

The idea behind Cigna Corp and Viemed Healthcare 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.