Correlation Between NVIDIA and CLOVER HEALTH

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

By analyzing existing cross correlation between NVIDIA and CLOVER HEALTH INV, you can compare the effects of market volatilities on NVIDIA 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 NVIDIA with a short position of CLOVER HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and CLOVER HEALTH.

Diversification Opportunities for NVIDIA and CLOVER HEALTH

-0.28

Correlation Coefficient

NVIDIA  CLOVER HEALTH

Very good diversification

The 3 months correlation between NVIDIA and CLOVER is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and CLOVER HEALTH INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLOVER HEALTH INV and NVIDIA 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 NVIDIA 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 INV has no effect on the direction of NVIDIA i.e., NVIDIA and CLOVER HEALTH go up and down completely randomly.

Pair Corralation between NVIDIA and CLOVER HEALTH

Assuming the 90 days trading horizon NVIDIA is expected to generate 0.56 times more return on investment than CLOVER HEALTH. However, NVIDIA is 1.77 times less risky than CLOVER HEALTH. It trades about 0.14 of its potential returns per unit of risk. CLOVER HEALTH INV is currently generating about 0.07 per unit of risk. If you would invest  1,954  in NVIDIA on October 24, 2024 and sell it today you would earn a total of  11,382  from holding NVIDIA or generate 582.5% return on investment over 90 days.

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

NVIDIA  vs.  CLOVER HEALTH INV

NVIDIA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, NVIDIA is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

CLOVER HEALTH INV

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CLOVER HEALTH INV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CLOVER HEALTH reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIA and CLOVER HEALTH

The main advantage of trading using opposite NVIDIA and CLOVER HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA 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 NVIDIA and CLOVER HEALTH INV 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..