Correlation Between CLOVER HEALTH and Koninklijke Philips

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

By analyzing existing cross correlation between CLOVER HEALTH INV and Koninklijke Philips NV, you can compare the effects of market volatilities on CLOVER HEALTH and Koninklijke Philips 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 Koninklijke Philips. Check out your portfolio center. Please also check ongoing floating volatility patterns of CLOVER HEALTH and Koninklijke Philips.

Diversification Opportunities for CLOVER HEALTH and Koninklijke Philips

0.49

Correlation Coefficient

CLOVER HEALTH  Koninklijke Philips

Very weak diversification

The 3 months correlation between CLOVER and Koninklijke is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding CLOVER HEALTH INV and Koninklijke Philips NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Philips 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 INV are associated (or correlated) with Koninklijke Philips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke Philips has no effect on the direction of CLOVER HEALTH i.e., CLOVER HEALTH and Koninklijke Philips go up and down completely randomly.

Pair Corralation between CLOVER HEALTH and Koninklijke Philips

Assuming the 90 days horizon CLOVER HEALTH INV is expected to generate 2.14 times more return on investment than Koninklijke Philips. However, CLOVER HEALTH is 2.14 times more volatile than Koninklijke Philips NV. It trades about 0.03 of its potential returns per unit of risk. Koninklijke Philips NV is currently generating about -0.03 per unit of risk. If you would invest  313.00  in CLOVER HEALTH INV on October 10, 2024 and sell it today you would earn a total of  6.00  from holding CLOVER HEALTH INV or generate 1.92% return on investment over 90 days.

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

CLOVER HEALTH INV  vs.  Koninklijke Philips NV

CLOVER HEALTH INV

Risk-Adjusted Performance

0 of 100

Very Weak

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

Koninklijke Philips

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Koninklijke Philips NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with CLOVER HEALTH and Koninklijke Philips

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

The idea behind CLOVER HEALTH INV and Koninklijke Philips NV 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.