Correlation Between Fidelity National and Clover Health

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

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

Diversification Opportunities for Fidelity National and Clover Health

0.38

Correlation Coefficient

Fidelity National  Clover Health

Weak diversification

The 3 months correlation between Fidelity and Clover is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information 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 Fidelity National 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 Fidelity National Information 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 Fidelity National i.e., Fidelity National and Clover Health go up and down completely randomly.

Pair Corralation between Fidelity National and Clover Health

Assuming the 90 days trading horizon Fidelity National Information is expected to generate 0.45 times more return on investment than Clover Health. However, Fidelity National Information is 2.2 times less risky than Clover Health. It trades about -0.01 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  3,216  in Fidelity National Information on October 8, 2024 and sell it today you would lose (24.00) from holding Fidelity National Information or give up 0.75% of portfolio value over 90 days.

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

Fidelity National Information  vs.  Clover Health Investments,

Fidelity National

Risk-Adjusted Performance

9 of 100

OK

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

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 Fidelity National and Clover Health

The main advantage of trading using opposite Fidelity National and Clover Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity National 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 Fidelity National Information 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.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.