Correlation Between Mednax and Cigna Corp

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

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

Diversification Opportunities for Mednax and Cigna Corp

0.51

Correlation Coefficient

Mednax  Cigna Corp

Very weak diversification

The 3 months correlation between Mednax and Cigna is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Mednax Inc and Cigna Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cigna Corp and Mednax 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 Mednax Inc 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 Mednax i.e., Mednax and Cigna Corp go up and down completely randomly.

Pair Corralation between Mednax and Cigna Corp

Allowing for the 90-day total investment horizon Mednax is expected to generate 1.24 times less return on investment than Cigna Corp. In addition to that, Mednax is 2.08 times more volatile than Cigna Corp. It trades about 0.06 of its total potential returns per unit of risk. Cigna Corp is currently generating about 0.15 per unit of volatility. 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 Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Mednax Inc  vs.  Cigna Corp

Mednax Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mednax Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Mednax exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Mednax and Cigna Corp

The main advantage of trading using opposite Mednax and Cigna Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mednax 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 Mednax Inc 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.

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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.