We have estimated a model for CIGNA Corporation (CI). The company is associated with health service. The model for CI is stable during the past ten months. It is a deterministic one and has been defined by the consumer price index of pets, pet products and services (PETS) and transportation services (TS). The former CPI component does not lead the share price and the latter one leads by 3 months. Figure 1 depicts both involved indices. Relevant coefficients are both negative. Therefore the growth in both indices causes the share price to fall. The slope of time trend is positive. The best-fit 2-C model for CI(t) is as follows:
CI(t) = -2.72PETS(t) – 1.63TS(t-3) + 28.20(t-1990) + 299.39
where t is calendar time.
The predicted curve in Figure 2 repeats the measured one. The residual error is $3.46 for the period between June 2003 and March 2011. The model does not include a slight fall in the price in the second quarter since the current level is underestimated and corresponding correction might be negative.
Figure 1. Evolution of the price of PETS and TS.
Figure 2. Observed and predicted CI share prices.