Correlation Between Clover Health and Waste Management

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

Diversification Opportunities for Clover Health and Waste Management

-0.33
  Correlation Coefficient

Very good diversification

The 3 months correlation between Clover and Waste is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Clover Health Investments, and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Clover Health i.e., Clover Health and Waste Management go up and down completely randomly.

Pair Corralation between Clover Health and Waste Management

Assuming the 90 days trading horizon Clover Health is expected to generate 5.02 times less return on investment than Waste Management. In addition to that, Clover Health is 2.52 times more volatile than Waste Management. It trades about 0.01 of its total potential returns per unit of risk. Waste Management is currently generating about 0.12 per unit of volatility. If you would invest  56,252  in Waste Management on October 7, 2024 and sell it today you would earn a total of  5,967  from holding Waste Management or generate 10.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Clover Health Investments,  vs.  Waste Management

 Performance 
       Timeline  
Clover Health Invest 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Waste Management 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Waste Management are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Waste Management may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Clover Health and Waste Management Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Clover Health and Waste Management

The main advantage of trading using opposite Clover Health and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clover Health position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.
The idea behind Clover Health Investments, and Waste Management 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.
Check out your portfolio center.
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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