Correlation Between Cigna Corp and McKesson
Can any of the company-specific risk be diversified away by investing in both Cigna Corp and McKesson 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 McKesson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cigna Corp and McKesson, you can compare the effects of market volatilities on Cigna Corp and McKesson 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 McKesson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cigna Corp and McKesson.
Diversification Opportunities for Cigna Corp and McKesson
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cigna and McKesson is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cigna Corp and McKesson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McKesson 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 McKesson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McKesson has no effect on the direction of Cigna Corp i.e., Cigna Corp and McKesson go up and down completely randomly.
Pair Corralation between Cigna Corp and McKesson
Allowing for the 90-day total investment horizon Cigna Corp is expected to under-perform the McKesson. In addition to that, Cigna Corp is 1.14 times more volatile than McKesson. It trades about -0.15 of its total potential returns per unit of risk. McKesson is currently generating about 0.16 per unit of volatility. If you would invest 47,995 in McKesson on September 24, 2024 and sell it today you would earn a total of 9,681 from holding McKesson or generate 20.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Cigna Corp vs. McKesson
Performance |
Timeline |
Cigna Corp |
McKesson |
Cigna Corp and McKesson Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cigna Corp and McKesson
The main advantage of trading using opposite Cigna Corp and McKesson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cigna Corp position performs unexpectedly, McKesson 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 McKesson will offset losses from the drop in McKesson's long position.Cigna Corp vs. Elevance Health | Cigna Corp vs. UnitedHealth Group Incorporated | Cigna Corp vs. Centene Corp | Cigna Corp vs. Molina Healthcare |
McKesson vs. Cigna Corp | McKesson vs. Definitive Healthcare Corp | McKesson vs. Edwards Lifesciences Corp | McKesson vs. Outset Medical |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |