Correlation Between Metalurgica Gerdau and Clover Health

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

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

Diversification Opportunities for Metalurgica Gerdau and Clover Health

-0.18

Correlation Coefficient

Metalurgica Gerdau  Clover Health

Good diversification

The 3 months correlation between Metalurgica and Clover is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA 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 Metalurgica Gerdau 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 Metalurgica Gerdau SA 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 Metalurgica Gerdau i.e., Metalurgica Gerdau and Clover Health go up and down completely randomly.

Pair Corralation between Metalurgica Gerdau and Clover Health

Assuming the 90 days trading horizon Metalurgica Gerdau SA is expected to under-perform the Clover Health. But the preferred stock apears to be less risky and, when comparing its historical volatility, Metalurgica Gerdau SA is 1.81 times less risky than Clover Health. The preferred stock trades about -0.07 of its potential returns per unit of risk. The Clover Health Investments, is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,048  in Clover Health Investments, on October 7, 2024 and sell it today you would lose (38.00) from holding Clover Health Investments, or give up 1.86% of portfolio value over 90 days.

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

Metalurgica Gerdau SA  vs.  Clover Health Investments,

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.

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 Metalurgica Gerdau and Clover Health

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

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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.