Correlation Between 908 Devices and Cigna Corp

Can any of the company-specific risk be diversified away by investing in both 908 Devices 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 908 Devices and Cigna Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 908 Devices and Cigna Corp, you can compare the effects of market volatilities on 908 Devices 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 908 Devices with a short position of Cigna Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of 908 Devices and Cigna Corp.

Diversification Opportunities for 908 Devices and Cigna Corp

0.65

Correlation Coefficient

908 Devices  Cigna Corp

Poor diversification

The 3 months correlation between 908 and Cigna is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding 908 Devices and Cigna Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cigna Corp and 908 Devices 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 908 Devices 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 908 Devices i.e., 908 Devices and Cigna Corp go up and down completely randomly.

Pair Corralation between 908 Devices and Cigna Corp

Given the investment horizon of 90 days 908 Devices is expected to under-perform the Cigna Corp. In addition to that, 908 Devices is 2.76 times more volatile than Cigna Corp. It trades about -0.11 of its total potential returns per unit of risk. Cigna Corp is currently generating about -0.08 per unit of volatility. If you would invest  35,214  in Cigna Corp on September 24, 2024 and sell it today you would lose (7,522) from holding Cigna Corp or give up 21.36% of portfolio value over 90 days.

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

908 Devices  vs.  Cigna Corp

908 Devices

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 908 Devices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 abnormal 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.

Pair Trading with 908 Devices and Cigna Corp

The main advantage of trading using opposite 908 Devices and Cigna Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 908 Devices 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 908 Devices 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.