Correlation Between Cigna Corp and Ontrak

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

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

Diversification Opportunities for Cigna Corp and Ontrak

0.86

Correlation Coefficient

Cigna Corp  Ontrak

Very poor diversification

The 3 months correlation between Cigna and Ontrak is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Cigna Corp and Ontrak Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ontrak Inc 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 Ontrak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ontrak Inc has no effect on the direction of Cigna Corp i.e., Cigna Corp and Ontrak go up and down completely randomly.

Pair Corralation between Cigna Corp and Ontrak

Allowing for the 90-day total investment horizon Cigna Corp is expected to generate 0.21 times more return on investment than Ontrak. However, Cigna Corp is 4.86 times less risky than Ontrak. It trades about -0.06 of its potential returns per unit of risk. Ontrak Inc is currently generating about -0.06 per unit of risk. If you would invest  36,408  in Cigna Corp on September 3, 2024 and sell it today you would lose (2,628) from holding Cigna Corp or give up 7.22% of portfolio value over 90 days.

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

Cigna Corp  vs.  Ontrak Inc

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.

Ontrak Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ontrak Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Cigna Corp and Ontrak

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

The idea behind Cigna Corp and Ontrak Inc 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.