Correlation Between Boston Scientific and Cigna Corp

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

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

Diversification Opportunities for Boston Scientific and Cigna Corp

-0.5

Correlation Coefficient

Boston Scientific  Cigna Corp

Very good diversification

The 3 months correlation between Boston and Cigna is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Boston Scientific Corp and Cigna Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cigna Corp and Boston Scientific 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 Boston Scientific Corp 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 Boston Scientific i.e., Boston Scientific and Cigna Corp go up and down completely randomly.

Pair Corralation between Boston Scientific and Cigna Corp

Considering the 90-day investment horizon Boston Scientific Corp is expected to generate 0.58 times more return on investment than Cigna Corp. However, Boston Scientific Corp is 1.73 times less risky than Cigna Corp. It trades about 0.18 of its potential returns per unit of risk. Cigna Corp is currently generating about -0.06 per unit of risk. If you would invest  8,114  in Boston Scientific Corp on September 3, 2024 and sell it today you would earn a total of  929.00  from holding Boston Scientific Corp or generate 11.45% return on investment over 90 days.

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

Boston Scientific Corp  vs.  Cigna Corp

Boston Scientific Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Scientific Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Boston Scientific 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 latest abnormal performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Boston Scientific and Cigna Corp

The main advantage of trading using opposite Boston Scientific and Cigna Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Scientific 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 Boston Scientific Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.