Correlation Between Discover Financial and Kinnevik Investment
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Kinnevik Investment 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 Kinnevik Investment 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 Kinnevik Investment AB, you can compare the effects of market volatilities on Discover Financial and Kinnevik Investment 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 Kinnevik Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Kinnevik Investment.
Diversification Opportunities for Discover Financial and Kinnevik Investment
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Discover and Kinnevik is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Kinnevik Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinnevik Investment 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 Kinnevik Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinnevik Investment has no effect on the direction of Discover Financial i.e., Discover Financial and Kinnevik Investment go up and down completely randomly.
Pair Corralation between Discover Financial and Kinnevik Investment
Assuming the 90 days trading horizon Discover Financial is expected to generate 3.05 times less return on investment than Kinnevik Investment. But when comparing it to its historical volatility, Discover Financial Services is 1.4 times less risky than Kinnevik Investment. It trades about 0.01 of its potential returns per unit of risk. Kinnevik Investment AB is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 7,979 in Kinnevik Investment AB on October 12, 2024 and sell it today you would earn a total of 9.00 from holding Kinnevik Investment AB or generate 0.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Discover Financial Services vs. Kinnevik Investment AB
Performance |
| Timeline |
| Discover Financial |
| Kinnevik Investment |
Discover Financial and Kinnevik Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Kinnevik Investment
The main advantage of trading using opposite Discover Financial and Kinnevik Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Kinnevik Investment 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 Kinnevik Investment will offset losses from the drop in Kinnevik Investment's long position.| Discover Financial vs. Griffin Mining | Discover Financial vs. Pfeiffer Vacuum Technology | Discover Financial vs. Endeavour Mining Corp | Discover Financial vs. Silver Bullet Data |
| Kinnevik Investment vs. Walmart | Kinnevik Investment vs. BYD Co | Kinnevik Investment vs. Volkswagen AG | Kinnevik Investment vs. Volkswagen AG Non Vtg |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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