Correlation Between Barclays PLC and Clover Health

Can any of the company-specific risk be diversified away by investing in both Barclays PLC 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 Barclays PLC and Clover Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Barclays PLC and Clover Health Investments,, you can compare the effects of market volatilities on Barclays PLC 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 Barclays PLC with a short position of Clover Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays PLC and Clover Health.

Diversification Opportunities for Barclays PLC and Clover Health

-0.59

Correlation Coefficient

Barclays PLC  Clover Health

Excellent diversification

The 3 months correlation between Barclays and Clover is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Barclays PLC and Clover Health Investments, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clover Health Invest and Barclays PLC 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 Barclays PLC 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 Invest has no effect on the direction of Barclays PLC i.e., Barclays PLC and Clover Health go up and down completely randomly.

Pair Corralation between Barclays PLC and Clover Health

Assuming the 90 days trading horizon Barclays PLC is expected to generate 0.56 times more return on investment than Clover Health. However, Barclays PLC is 1.8 times less risky than Clover Health. It trades about 0.0 of its potential returns per unit of risk. Clover Health Investments, is currently generating about -0.02 per unit of risk. If you would invest  8,156  in Barclays PLC on October 6, 2024 and sell it today you would lose (26.00) from holding Barclays PLC or give up 0.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Barclays PLC  vs.  Clover Health Investments,

Barclays PLC

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barclays PLC are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Barclays PLC sustained solid returns over the last few months and may actually be approaching a breakup point.

Clover Health Invest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clover Health Investments, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Clover Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Barclays PLC and Clover Health

The main advantage of trading using opposite Barclays PLC and Clover Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays PLC 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 Barclays PLC and Clover Health Investments, 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.