Correlation Between Discover Financial and Uniper SE
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Uniper SE 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 Uniper SE 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 Uniper SE, you can compare the effects of market volatilities on Discover Financial and Uniper SE 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 Uniper SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Uniper SE.
Diversification Opportunities for Discover Financial and Uniper SE
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Discover and Uniper is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Uniper SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uniper SE 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 Uniper SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uniper SE has no effect on the direction of Discover Financial i.e., Discover Financial and Uniper SE go up and down completely randomly.
Pair Corralation between Discover Financial and Uniper SE
Assuming the 90 days trading horizon Discover Financial Services is expected to generate 1.87 times more return on investment than Uniper SE. However, Discover Financial is 1.87 times more volatile than Uniper SE. It trades about 0.24 of its potential returns per unit of risk. Uniper SE is currently generating about -0.07 per unit of risk. If you would invest 15,039 in Discover Financial Services on September 1, 2024 and sell it today you would earn a total of 3,204 from holding Discover Financial Services or generate 21.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Discover Financial Services vs. Uniper SE
Performance |
| Timeline |
| Discover Financial |
| Uniper SE |
Discover Financial and Uniper SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Uniper SE
The main advantage of trading using opposite Discover Financial and Uniper SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Uniper SE 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 Uniper SE will offset losses from the drop in Uniper SE's long position.| Discover Financial vs. Uniper SE | Discover Financial vs. Mulberry Group PLC | Discover Financial vs. London Security Plc | Discover Financial vs. Triad Group PLC |
| Uniper SE vs. Zoom Video Communications | Uniper SE vs. Iron Mountain | Uniper SE vs. BE Semiconductor Industries | Uniper SE vs. Cairo Communication SpA |
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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