Correlation Between Target and Clover Health

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

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

Diversification Opportunities for Target and Clover Health

0.23

Correlation Coefficient

Target  Clover Health

Modest diversification

The 3 months correlation between Target and Clover is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Target 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 Target 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 Target 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 Target i.e., Target and Clover Health go up and down completely randomly.

Pair Corralation between Target and Clover Health

Assuming the 90 days trading horizon Target is expected to under-perform the Clover Health. But the stock apears to be less risky and, when comparing its historical volatility, Target is 1.25 times less risky than Clover Health. The stock trades about -0.11 of its potential returns per unit of risk. The Clover Health Investments, is currently generating about 0.49 of returns per unit of risk over similar time horizon. If you would invest  2,004  in Clover Health Investments, on October 22, 2024 and sell it today you would earn a total of  488.00  from holding Clover Health Investments, or generate 24.35% return on investment over 90 days.

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

Target  vs.  Clover Health Investments,

Target

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Target has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Clover Health Invest

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Clover Health Investments, are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Clover Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Target and Clover Health

The main advantage of trading using opposite Target and Clover Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target 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 Target 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.