Correlation Between Clover Health and Phillips

Can any of the company-specific risk be diversified away by investing in both Clover Health and Phillips 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 Phillips 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 Phillips 66, you can compare the effects of market volatilities on Clover Health and Phillips 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 Phillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clover Health and Phillips.

Diversification Opportunities for Clover Health and Phillips

0.21

Correlation Coefficient

Clover Health  Phillips

Modest diversification

The 3 months correlation between Clover and Phillips is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Clover Health Investments, and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 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 Phillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phillips 66 has no effect on the direction of Clover Health i.e., Clover Health and Phillips go up and down completely randomly.

Pair Corralation between Clover Health and Phillips

Assuming the 90 days trading horizon Clover Health Investments, is expected to generate 2.61 times more return on investment than Phillips. However, Clover Health is 2.61 times more volatile than Phillips 66. It trades about 0.14 of its potential returns per unit of risk. Phillips 66 is currently generating about 0.04 per unit of risk. If you would invest  442.00  in Clover Health Investments, on October 8, 2024 and sell it today you would earn a total of  1,568  from holding Clover Health Investments, or generate 354.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	63.29%
Values	Daily Returns

Clover Health Investments,  vs.  Phillips 66

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.

Phillips 66

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phillips 66 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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 Phillips

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

The idea behind Clover Health Investments, and Phillips 66 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .