Correlation Between Clover Health and Walmart
Can any of the company-specific risk be diversified away by investing in both Clover Health and Walmart 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 Walmart 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 Walmart, you can compare the effects of market volatilities on Clover Health and Walmart 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 Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clover Health and Walmart.
Diversification Opportunities for Clover Health and Walmart
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Clover and Walmart is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Clover Health Investments, and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart 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 Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Clover Health i.e., Clover Health and Walmart go up and down completely randomly.
Pair Corralation between Clover Health and Walmart
Assuming the 90 days trading horizon Clover Health Investments, is expected to generate 1.66 times more return on investment than Walmart. However, Clover Health is 1.66 times more volatile than Walmart. It trades about 0.39 of its potential returns per unit of risk. Walmart is currently generating about -0.17 per unit of risk. If you would invest 1,950 in Clover Health Investments, on October 17, 2024 and sell it today you would earn a total of 434.00 from holding Clover Health Investments, or generate 22.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clover Health Investments, vs. Walmart
Performance |
| Timeline |
| Clover Health Invest |
| Walmart |
Clover Health and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clover Health and Walmart
The main advantage of trading using opposite Clover Health and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clover Health position performs unexpectedly, Walmart 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 Walmart will offset losses from the drop in Walmart's long position.| Clover Health vs. Vulcan Materials | Clover Health vs. Caesars Entertainment, | Clover Health vs. Hospital Mater Dei | Clover Health vs. Applied Materials, |
| Walmart vs. JB Hunt Transport | Walmart vs. Metalrgica Riosulense SA | Walmart vs. Metalurgica Gerdau SA | Walmart vs. Melco Resorts Entertainment |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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