Correlation Between Cigna Corp and Becton Dickinson

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

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

Diversification Opportunities for Cigna Corp and Becton Dickinson

0.4

Correlation Coefficient

Cigna Corp  Becton Dickinson

Very weak diversification

The 3 months correlation between Cigna and Becton is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cigna Corp and Becton Dickinson and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Becton Dickinson 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 Becton Dickinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Becton Dickinson has no effect on the direction of Cigna Corp i.e., Cigna Corp and Becton Dickinson go up and down completely randomly.

Pair Corralation between Cigna Corp and Becton Dickinson

Allowing for the 90-day total investment horizon Cigna Corp is expected to under-perform the Becton Dickinson. In addition to that, Cigna Corp is 1.81 times more volatile than Becton Dickinson and. It trades about -0.14 of its total potential returns per unit of risk. Becton Dickinson and is currently generating about -0.05 per unit of volatility. If you would invest  23,615  in Becton Dickinson and on September 26, 2024 and sell it today you would lose (920.00) from holding Becton Dickinson and or give up 3.9% of portfolio value over 90 days.

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

Cigna Corp  vs.  Becton Dickinson and

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 inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Becton Dickinson

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Becton Dickinson and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Becton Dickinson is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cigna Corp and Becton Dickinson

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

The idea behind Cigna Corp and Becton Dickinson and 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .