Correlation Between Discover Financial and Thales
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Thales 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 Thales 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 Thales, you can compare the effects of market volatilities on Discover Financial and Thales 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 Thales. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Thales.
Diversification Opportunities for Discover Financial and Thales
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Discover and Thales is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Thales in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thales 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 Thales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thales has no effect on the direction of Discover Financial i.e., Discover Financial and Thales go up and down completely randomly.
Pair Corralation between Discover Financial and Thales
Assuming the 90 days trading horizon Discover Financial Services is expected to generate 1.95 times more return on investment than Thales. However, Discover Financial is 1.95 times more volatile than Thales. It trades about 0.17 of its potential returns per unit of risk. Thales is currently generating about -0.03 per unit of risk. If you would invest 14,291 in Discover Financial Services on September 5, 2024 and sell it today you would earn a total of 3,314 from holding Discover Financial Services or generate 23.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Discover Financial Services vs. Thales
Performance |
| Timeline |
| Discover Financial |
| Thales |
Discover Financial and Thales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Thales
The main advantage of trading using opposite Discover Financial and Thales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Thales 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 Thales will offset losses from the drop in Thales' long position.| Discover Financial vs. GreenX Metals | Discover Financial vs. Panther Metals PLC | Discover Financial vs. Ecclesiastical Insurance Office | Discover Financial vs. Cornish Metals |
| Thales vs. Discover Financial Services | Thales vs. Atresmedia | Thales vs. Virgin Wines UK | Thales vs. Intermediate Capital 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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