Correlation Between MOBILE FACTORY and CLOVER HEALTH

Can any of the company-specific risk be diversified away by investing in both MOBILE FACTORY and CLOVER HEALTH 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 MOBILE FACTORY and CLOVER HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MOBILE FACTORY INC and CLOVER HEALTH INV, you can compare the effects of market volatilities on MOBILE FACTORY and CLOVER HEALTH 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 MOBILE FACTORY with a short position of CLOVER HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOBILE FACTORY and CLOVER HEALTH.

Diversification Opportunities for MOBILE FACTORY and CLOVER HEALTH

0.6

Correlation Coefficient

MOBILE FACTORY  CLOVER HEALTH

Poor diversification

The 3 months correlation between MOBILE and CLOVER is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding MOBILE FACTORY INC and CLOVER HEALTH INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLOVER HEALTH INV and MOBILE FACTORY 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 MOBILE FACTORY INC are associated (or correlated) with CLOVER HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLOVER HEALTH INV has no effect on the direction of MOBILE FACTORY i.e., MOBILE FACTORY and CLOVER HEALTH go up and down completely randomly.

Pair Corralation between MOBILE FACTORY and CLOVER HEALTH

Assuming the 90 days horizon MOBILE FACTORY is expected to generate 15.8 times less return on investment than CLOVER HEALTH. But when comparing it to its historical volatility, MOBILE FACTORY INC is 2.52 times less risky than CLOVER HEALTH. It trades about 0.01 of its potential returns per unit of risk. CLOVER HEALTH INV is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  298.00  in CLOVER HEALTH INV on December 20, 2024 and sell it today you would earn a total of  23.00  from holding CLOVER HEALTH INV or generate 7.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

MOBILE FACTORY INC  vs.  CLOVER HEALTH INV

MOBILE FACTORY INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days MOBILE FACTORY INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, MOBILE FACTORY is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

CLOVER HEALTH INV

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CLOVER HEALTH INV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CLOVER HEALTH reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MOBILE FACTORY and CLOVER HEALTH

The main advantage of trading using opposite MOBILE FACTORY and CLOVER HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOBILE FACTORY position performs unexpectedly, CLOVER HEALTH 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 CLOVER HEALTH will offset losses from the drop in CLOVER HEALTH's long position.

The idea behind MOBILE FACTORY INC and CLOVER HEALTH INV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.