you can do a gradual change of color by using the gradient tool. it will blend it instead of having a straight cutout line.
go to the paint bucket on your pallete on the left...
drag down the corner of it to select the gradient tool...
make your foreground color red and your background color blue..
go to the top of the screen where it shows the gradient picture...
click the dropdown arrow right next to it...
it will show the pattern with blue and red, select it
go to your sig, click one side and drag it to the other
thats it
