Correlation Between Clover Health and Centene Corp

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

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

Diversification Opportunities for Clover Health and Centene Corp

0.47

Correlation Coefficient

Clover Health  Centene Corp

Very weak diversification

The 3 months correlation between Clover and Centene is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Clover Health Investments and Centene Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centene Corp and Clover Health 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 Clover Health Investments are associated (or correlated) with Centene Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centene Corp has no effect on the direction of Clover Health i.e., Clover Health and Centene Corp go up and down completely randomly.

Pair Corralation between Clover Health and Centene Corp

Given the investment horizon of 90 days Clover Health Investments is expected to generate 0.69 times more return on investment than Centene Corp. However, Clover Health Investments is 1.45 times less risky than Centene Corp. It trades about -0.06 of its potential returns per unit of risk. Centene Corp is currently generating about -0.2 per unit of risk. If you would invest  335.00  in Clover Health Investments on May 6, 2025 and sell it today you would lose (57.00) from holding Clover Health Investments or give up 17.01% of portfolio value over 90 days.

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

Clover Health Investments  vs.  Centene Corp

Clover Health Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clover Health Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in September 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Centene Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Centene Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in September 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Clover Health and Centene Corp

The main advantage of trading using opposite Clover Health and Centene Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clover Health position performs unexpectedly, Centene Corp 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 Centene Corp will offset losses from the drop in Centene Corp's long position.

The idea behind Clover Health Investments and Centene Corp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.