Correlation Between Clover Health and United Airlines
Can any of the company-specific risk be diversified away by investing in both Clover Health and United Airlines 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 United Airlines 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 United Airlines Holdings, you can compare the effects of market volatilities on Clover Health and United Airlines 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 United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clover Health and United Airlines.
Diversification Opportunities for Clover Health and United Airlines
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Clover and United is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Clover Health Investments, and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings 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 United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of Clover Health i.e., Clover Health and United Airlines go up and down completely randomly.
Pair Corralation between Clover Health and United Airlines
Assuming the 90 days trading horizon Clover Health Investments, is expected to generate 1.63 times more return on investment than United Airlines. However, Clover Health is 1.63 times more volatile than United Airlines Holdings. It trades about 0.31 of its potential returns per unit of risk. United Airlines Holdings is currently generating about 0.12 per unit of risk. If you would invest 2,010 in Clover Health Investments, on November 4, 2024 and sell it today you would earn a total of 545.00 from holding Clover Health Investments, or generate 27.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clover Health Investments, vs. United Airlines Holdings
Performance |
| Timeline |
| Clover Health Invest |
| United Airlines Holdings |
Clover Health and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clover Health and United Airlines
The main advantage of trading using opposite Clover Health and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clover Health position performs unexpectedly, United Airlines 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 United Airlines will offset losses from the drop in United Airlines' long position.| Clover Health vs. Taiwan Semiconductor Manufacturing | Clover Health vs. Apple Inc | Clover Health vs. Alibaba Group Holding | Clover Health vs. Microsoft |
| United Airlines vs. Delta Air Lines | United Airlines vs. American Airlines Group | United Airlines vs. Alaska Air Group, | United Airlines vs. Gol Linhas Areas |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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