Correlation Between Clover Health and Public Storage

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

Diversification Opportunities for Clover Health and Public Storage

-0.6

Correlation Coefficient

Clover Health  Public Storage

Excellent diversification

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

Pair Corralation between Clover Health and Public Storage

Assuming the 90 days trading horizon Clover Health Investments, is expected to generate 4.14 times more return on investment than Public Storage. However, Clover Health is 4.14 times more volatile than Public Storage. It trades about 0.03 of its potential returns per unit of risk. Public Storage is currently generating about -0.16 per unit of risk. If you would invest  2,100  in Clover Health Investments, on December 25, 2024 and sell it today you would earn a total of  68.00  from holding Clover Health Investments, or generate 3.24% return on investment over 90 days.

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

Clover Health Investments,  vs.  Public Storage

Clover Health Invest

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Clover Health Investments, are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Clover Health may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Public Storage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Public Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Clover Health and Public Storage

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

The idea behind Clover Health Investments, and Public Storage 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.