Correlation Between Surgery Partners and Cigna Corp

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

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

Diversification Opportunities for Surgery Partners and Cigna Corp

0.68

Correlation Coefficient

Surgery Partners  Cigna Corp

Poor diversification

The 3 months correlation between Surgery and Cigna is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Surgery Partners and Cigna Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cigna Corp and Surgery Partners 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 Surgery Partners 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 Surgery Partners i.e., Surgery Partners and Cigna Corp go up and down completely randomly.

Pair Corralation between Surgery Partners and Cigna Corp

Given the investment horizon of 90 days Surgery Partners is expected to generate 1.28 times more return on investment than Cigna Corp. However, Surgery Partners is 1.28 times more volatile than Cigna Corp. It trades about 0.0 of its potential returns per unit of risk. Cigna Corp is currently generating about -0.26 per unit of risk. If you would invest  2,146  in Surgery Partners on October 6, 2024 and sell it today you would lose (17.00) from holding Surgery Partners or give up 0.79% of portfolio value over 90 days.

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

Surgery Partners  vs.  Cigna Corp

Surgery Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surgery Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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

Pair Trading with Surgery Partners and Cigna Corp

The main advantage of trading using opposite Surgery Partners and Cigna Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Surgery Partners 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 Surgery Partners 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.