Correlation Between Discover Financial and Retail Estates
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Retail Estates 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 Discover Financial and Retail Estates into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Discover Financial Services and Retail Estates NV, you can compare the effects of market volatilities on Discover Financial and Retail Estates 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 Discover Financial with a short position of Retail Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Retail Estates.
Diversification Opportunities for Discover Financial and Retail Estates
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Discover and Retail is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Retail Estates NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates NV and Discover Financial 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 Discover Financial Services are associated (or correlated) with Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates NV has no effect on the direction of Discover Financial i.e., Discover Financial and Retail Estates go up and down completely randomly.
Pair Corralation between Discover Financial and Retail Estates
Assuming the 90 days trading horizon Discover Financial Services is expected to generate 0.61 times more return on investment than Retail Estates. However, Discover Financial Services is 1.64 times less risky than Retail Estates. It trades about 0.07 of its potential returns per unit of risk. Retail Estates NV is currently generating about 0.02 per unit of risk. If you would invest 10,905 in Discover Financial Services on August 31, 2024 and sell it today you would earn a total of 7,338 from holding Discover Financial Services or generate 67.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Discover Financial Services vs. Retail Estates NV
Performance |
| Timeline |
| Discover Financial |
| Retail Estates NV |
Discover Financial and Retail Estates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Retail Estates
The main advantage of trading using opposite Discover Financial and Retail Estates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Retail Estates 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 Retail Estates will offset losses from the drop in Retail Estates' long position.| Discover Financial vs. Neometals | Discover Financial vs. Coor Service Management | Discover Financial vs. Aeorema Communications Plc | Discover Financial vs. JLEN Environmental Assets |
| Retail Estates vs. Leroy Seafood Group | Retail Estates vs. MT Bank Corp | Retail Estates vs. Virgin Wines UK | Retail Estates vs. UNIQA Insurance Group |
Check out your portfolio center.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.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Transaction History View history of all your transactions and understand their impact on performance |