Correlation Between Discover Financial and Schweiter Technologies
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Schweiter Technologies 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 Schweiter Technologies 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 Schweiter Technologies AG, you can compare the effects of market volatilities on Discover Financial and Schweiter Technologies 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 Schweiter Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Schweiter Technologies.
Diversification Opportunities for Discover Financial and Schweiter Technologies
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Discover and Schweiter is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Schweiter Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schweiter Technologies 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 Schweiter Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schweiter Technologies has no effect on the direction of Discover Financial i.e., Discover Financial and Schweiter Technologies go up and down completely randomly.
Pair Corralation between Discover Financial and Schweiter Technologies
Assuming the 90 days trading horizon Discover Financial Services is expected to generate 1.21 times more return on investment than Schweiter Technologies. However, Discover Financial is 1.21 times more volatile than Schweiter Technologies AG. It trades about 0.07 of its potential returns per unit of risk. Schweiter Technologies AG is currently generating about -0.04 per unit of risk. If you would invest 10,259 in Discover Financial Services on November 28, 2024 and sell it today you would earn a total of 8,493 from holding Discover Financial Services or generate 82.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.18% |
| Values | Daily Returns |
Discover Financial Services vs. Schweiter Technologies AG
Performance |
| Timeline |
| Discover Financial |
| Schweiter Technologies |
Discover Financial and Schweiter Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Schweiter Technologies
The main advantage of trading using opposite Discover Financial and Schweiter Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Schweiter Technologies 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 Schweiter Technologies will offset losses from the drop in Schweiter Technologies' long position.| Discover Financial vs. Vietnam Enterprise Investments | Discover Financial vs. Chrysalis Investments | Discover Financial vs. Fortune Brands Home | Discover Financial vs. BlackRock Frontiers Investment |
| Schweiter Technologies vs. Naked Wines plc | Schweiter Technologies vs. Synthomer plc | Schweiter Technologies vs. Zegona Communications Plc | Schweiter Technologies vs. Bigblu Broadband PLC |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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