Correlation Between CIGNA and Citi Trends

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

By analyzing existing cross correlation between CIGNA P 305 and Citi Trends, you can compare the effects of market volatilities on CIGNA and Citi Trends 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 with a short position of Citi Trends. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIGNA and Citi Trends.

Diversification Opportunities for CIGNA and Citi Trends

-0.17

Correlation Coefficient

CIGNA  Citi Trends

Good diversification

The 3 months correlation between CIGNA and Citi is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding CIGNA P 305 and Citi Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citi Trends and CIGNA 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 P 305 are associated (or correlated) with Citi Trends. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citi Trends has no effect on the direction of CIGNA i.e., CIGNA and Citi Trends go up and down completely randomly.

Pair Corralation between CIGNA and Citi Trends

Assuming the 90 days trading horizon CIGNA P 305 is expected to generate 0.22 times more return on investment than Citi Trends. However, CIGNA P 305 is 4.58 times less risky than Citi Trends. It trades about 0.08 of its potential returns per unit of risk. Citi Trends is currently generating about -0.05 per unit of risk. If you would invest  9,463  in CIGNA P 305 on December 28, 2024 and sell it today you would earn a total of  217.00  from holding CIGNA P 305 or generate 2.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	61.67%
Values	Daily Returns

CIGNA P 305  vs.  Citi Trends

CIGNA P 305

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CIGNA P 305 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. 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.

Citi Trends

Risk-Adjusted Performance

Very Weak

Over the last 90 days Citi Trends has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with CIGNA and Citi Trends

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

The idea behind CIGNA P 305 and Citi Trends 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.