Correlation Between Discover Financial and IDEXX Laboratories
Can any of the company-specific risk be diversified away by investing in both Discover Financial and IDEXX Laboratories 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 IDEXX Laboratories 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 IDEXX Laboratories, you can compare the effects of market volatilities on Discover Financial and IDEXX Laboratories 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 IDEXX Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and IDEXX Laboratories.
Diversification Opportunities for Discover Financial and IDEXX Laboratories
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Discover and IDEXX is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and IDEXX Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDEXX Laboratories 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 IDEXX Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDEXX Laboratories has no effect on the direction of Discover Financial i.e., Discover Financial and IDEXX Laboratories go up and down completely randomly.
Pair Corralation between Discover Financial and IDEXX Laboratories
Assuming the 90 days trading horizon Discover Financial Services is expected to generate 1.26 times more return on investment than IDEXX Laboratories. However, Discover Financial is 1.26 times more volatile than IDEXX Laboratories. It trades about 0.14 of its potential returns per unit of risk. IDEXX Laboratories is currently generating about -0.01 per unit of risk. If you would invest 8,459 in Discover Financial Services on September 14, 2024 and sell it today you would earn a total of 9,158 from holding Discover Financial Services or generate 108.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 96.36% |
| Values | Daily Returns |
Discover Financial Services vs. IDEXX Laboratories
Performance |
| Timeline |
| Discover Financial |
| IDEXX Laboratories |
Discover Financial and IDEXX Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and IDEXX Laboratories
The main advantage of trading using opposite Discover Financial and IDEXX Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, IDEXX Laboratories 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 IDEXX Laboratories will offset losses from the drop in IDEXX Laboratories' long position.| Discover Financial vs. Dolly Varden Silver | Discover Financial vs. Ironveld Plc | Discover Financial vs. Baker Steel Resources | Discover Financial vs. Endeavour Mining Corp |
| IDEXX Laboratories vs. Datalogic | IDEXX Laboratories vs. Discover Financial Services | IDEXX Laboratories vs. Automatic Data Processing | IDEXX Laboratories vs. Zoom Video Communications |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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