Correlation Between Skillz Platform and Clover Health

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

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

Diversification Opportunities for Skillz Platform and Clover Health

0.85

Correlation Coefficient

Skillz Platform  Clover Health

Very poor diversification

The 3 months correlation between Skillz and Clover is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Skillz Platform and Clover Health Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clover Health Investments and Skillz Platform 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 Skillz Platform 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 Investments has no effect on the direction of Skillz Platform i.e., Skillz Platform and Clover Health go up and down completely randomly.

Pair Corralation between Skillz Platform and Clover Health

Given the investment horizon of 90 days Skillz Platform is expected to under-perform the Clover Health. In addition to that, Skillz Platform is 1.3 times more volatile than Clover Health Investments. It trades about -0.01 of its total potential returns per unit of risk. Clover Health Investments is currently generating about 0.06 per unit of volatility. If you would invest  319.00  in Clover Health Investments on December 28, 2024 and sell it today you would earn a total of  32.00  from holding Clover Health Investments or generate 10.03% return on investment over 90 days.

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

Skillz Platform  vs.  Clover Health Investments

Skillz Platform

Risk-Adjusted Performance

Weak

Over the last 90 days Skillz Platform has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Skillz Platform is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Clover Health Investments

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Clover Health Investments are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Clover Health showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Skillz Platform and Clover Health

The main advantage of trading using opposite Skillz Platform and Clover Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skillz Platform 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 Skillz Platform 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.