Correlation Between Cigna Corp and SurModics

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

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

Diversification Opportunities for Cigna Corp and SurModics

-0.3

Correlation Coefficient

Cigna Corp  SurModics

Very good diversification

The 3 months correlation between Cigna and SurModics is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cigna Corp and SurModics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SurModics 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 SurModics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SurModics has no effect on the direction of Cigna Corp i.e., Cigna Corp and SurModics go up and down completely randomly.

Pair Corralation between Cigna Corp and SurModics

Allowing for the 90-day total investment horizon Cigna Corp is expected to under-perform the SurModics. In addition to that, Cigna Corp is 3.44 times more volatile than SurModics. It trades about -0.17 of its total potential returns per unit of risk. SurModics is currently generating about 0.03 per unit of volatility. If you would invest  3,934  in SurModics on September 23, 2024 and sell it today you would earn a total of  41.00  from holding SurModics or generate 1.04% 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.  SurModics

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.

SurModics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SurModics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, SurModics 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 SurModics

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

The idea behind Cigna Corp and SurModics 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.