Correlation Between Clover Health and Molina Healthcare
Can any of the company-specific risk be diversified away by investing in both Clover Health and Molina Healthcare 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 Clover Health and Molina Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clover Health Investments and Molina Healthcare, you can compare the effects of market volatilities on Clover Health and Molina Healthcare 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 Clover Health with a short position of Molina Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clover Health and Molina Healthcare.
Diversification Opportunities for Clover Health and Molina Healthcare
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Clover and Molina is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Clover Health Investments and Molina Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molina Healthcare and Clover Health 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 Clover Health Investments are associated (or correlated) with Molina Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molina Healthcare has no effect on the direction of Clover Health i.e., Clover Health and Molina Healthcare go up and down completely randomly.
Pair Corralation between Clover Health and Molina Healthcare
Given the investment horizon of 90 days Clover Health Investments is expected to under-perform the Molina Healthcare. In addition to that, Clover Health is 1.9 times more volatile than Molina Healthcare. It trades about -0.13 of its total potential returns per unit of risk. Molina Healthcare is currently generating about -0.1 per unit of volatility. If you would invest 31,520 in Molina Healthcare on August 28, 2024 and sell it today you would lose (1,723) from holding Molina Healthcare or give up 5.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clover Health Investments vs. Molina Healthcare
Performance |
| Timeline |
| Clover Health Investments |
| Molina Healthcare |
Clover Health and Molina Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clover Health and Molina Healthcare
The main advantage of trading using opposite Clover Health and Molina Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clover Health position performs unexpectedly, Molina Healthcare 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 Molina Healthcare will offset losses from the drop in Molina Healthcare's long position.| Clover Health vs. Skillz Platform | Clover Health vs. BlackBerry | Clover Health vs. Fubotv Inc | Clover Health vs. SNDL Inc |
| Molina Healthcare vs. Cigna Corp | Molina Healthcare vs. Humana Inc | Molina Healthcare vs. Elevance Health | Molina Healthcare vs. Alignment Healthcare LLC |
Check out your portfolio center.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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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