Correlation Between Clover Health and Metalurgica Gerdau

Can any of the company-specific risk be diversified away by investing in both Clover Health and Metalurgica Gerdau 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 Metalurgica Gerdau 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 Metalurgica Gerdau SA, you can compare the effects of market volatilities on Clover Health and Metalurgica Gerdau 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 Metalurgica Gerdau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clover Health and Metalurgica Gerdau.

Diversification Opportunities for Clover Health and Metalurgica Gerdau

-0.18

Correlation Coefficient

Clover Health  Metalurgica Gerdau

Good diversification

The 3 months correlation between Clover and Metalurgica is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Clover Health Investments, and Metalurgica Gerdau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalurgica Gerdau 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 Metalurgica Gerdau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalurgica Gerdau has no effect on the direction of Clover Health i.e., Clover Health and Metalurgica Gerdau go up and down completely randomly.

Pair Corralation between Clover Health and Metalurgica Gerdau

Assuming the 90 days trading horizon Clover Health Investments, is expected to under-perform the Metalurgica Gerdau. In addition to that, Clover Health is 2.16 times more volatile than Metalurgica Gerdau SA. It trades about -0.12 of its total potential returns per unit of risk. Metalurgica Gerdau SA is currently generating about -0.19 per unit of volatility. If you would invest  1,120  in Metalurgica Gerdau SA on October 7, 2024 and sell it today you would lose (145.00) from holding Metalurgica Gerdau SA or give up 12.95% of portfolio value over 90 days.

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

Clover Health Investments,  vs.  Metalurgica Gerdau SA

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.

Metalurgica Gerdau

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metalurgica Gerdau SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Preferred Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Clover Health and Metalurgica Gerdau

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

The idea behind Clover Health Investments, and Metalurgica Gerdau SA 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 Stocks Directory module to find actively traded stocks across global markets.