Correlation Between Emerson Electric and CIGNA

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

By analyzing existing cross correlation between Emerson Electric and CIGNA P, you can compare the effects of market volatilities on Emerson Electric and CIGNA 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 Emerson Electric with a short position of CIGNA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Electric and CIGNA.

Diversification Opportunities for Emerson Electric and CIGNA

0.0

Correlation Coefficient

Emerson Electric  CIGNA

Pay attention - limited upside

The 3 months correlation between Emerson and CIGNA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric and CIGNA P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIGNA P and Emerson Electric 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 Emerson Electric are associated (or correlated) with CIGNA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIGNA P has no effect on the direction of Emerson Electric i.e., Emerson Electric and CIGNA go up and down completely randomly.

Pair Corralation between Emerson Electric and CIGNA

If you would invest  0.00  in CIGNA P on December 23, 2024 and sell it today you would earn a total of  0.00  from holding CIGNA P or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.64%
Values	Daily Returns

Emerson Electric  vs.  CIGNA P

Emerson Electric

Risk-Adjusted Performance

Very Weak

Over the last 90 days Emerson Electric has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's primary indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

CIGNA P

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Emerson Electric and CIGNA

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

The idea behind Emerson Electric and CIGNA P 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.