Correlation Between Intuitive Surgical and Cigna Corp

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

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

Diversification Opportunities for Intuitive Surgical and Cigna Corp

-0.57

Correlation Coefficient

Intuitive Surgical  Cigna Corp

Excellent diversification

The 3 months correlation between Intuitive and Cigna is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Surgical and Cigna Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cigna Corp and Intuitive Surgical 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 Intuitive Surgical are associated (or correlated) with Cigna Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cigna Corp has no effect on the direction of Intuitive Surgical i.e., Intuitive Surgical and Cigna Corp go up and down completely randomly.

Pair Corralation between Intuitive Surgical and Cigna Corp

Given the investment horizon of 90 days Intuitive Surgical is expected to generate 0.48 times more return on investment than Cigna Corp. However, Intuitive Surgical is 2.07 times less risky than Cigna Corp. It trades about -0.17 of its potential returns per unit of risk. Cigna Corp is currently generating about -0.32 per unit of risk. If you would invest  54,787  in Intuitive Surgical on September 23, 2024 and sell it today you would lose (2,344) from holding Intuitive Surgical or give up 4.28% of portfolio value over 90 days.

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

Intuitive Surgical  vs.  Cigna Corp

Intuitive Surgical

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Surgical are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Intuitive Surgical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 inconsistent 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.

Pair Trading with Intuitive Surgical and Cigna Corp

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

The idea behind Intuitive Surgical and Cigna Corp 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.