Correlation Between Cigna Corp and Magellan Health

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Can any of the company-specific risk be diversified away by investing in both Cigna Corp and Magellan Health 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 Corp and Magellan Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cigna Corp and Magellan Health, you can compare the effects of market volatilities on Cigna Corp and Magellan Health 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 Corp with a short position of Magellan Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cigna Corp and Magellan Health.

Diversification Opportunities for Cigna Corp and Magellan Health

-0.1
  Correlation Coefficient

Good diversification

The 3 months correlation between Cigna and Magellan is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Cigna Corp and Magellan Health Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Health and Cigna Corp 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 Corp are associated (or correlated) with Magellan Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magellan Health has no effect on the direction of Cigna Corp i.e., Cigna Corp and Magellan Health go up and down completely randomly.

Pair Corralation between Cigna Corp and Magellan Health

If you would invest  16,947  in Cigna Corp on May 18, 2022 and sell it today you would earn a total of  12,209  from holding Cigna Corp or generate 72.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Cigna Corp  vs.  Magellan Health Inc

 Performance (%) 
       Timeline  
Cigna Corp 
Cigna Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Cigna Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, Cigna Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Cigna Price Channel

Magellan Health 
Magellan Performance
0 of 100
Over the last 90 days Magellan Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Magellan Health is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Cigna Corp and Magellan Health Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cigna Corp and Magellan Health

The main advantage of trading using opposite Cigna Corp and Magellan Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cigna Corp position performs unexpectedly, Magellan Health 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 Magellan Health will offset losses from the drop in Magellan Health's long position.
The idea behind Cigna Corp and Magellan Health 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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