Correlation Between Discover Financial and Datagroup
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Datagroup 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 Datagroup 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 Datagroup SE, you can compare the effects of market volatilities on Discover Financial and Datagroup 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 Datagroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Datagroup.
Diversification Opportunities for Discover Financial and Datagroup
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Discover and Datagroup is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Datagroup SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datagroup 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 Datagroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datagroup SE has no effect on the direction of Discover Financial i.e., Discover Financial and Datagroup go up and down completely randomly.
Pair Corralation between Discover Financial and Datagroup
Assuming the 90 days trading horizon Discover Financial Services is expected to generate 1.07 times more return on investment than Datagroup. However, Discover Financial is 1.07 times more volatile than Datagroup SE. It trades about 0.07 of its potential returns per unit of risk. Datagroup SE is currently generating about -0.02 per unit of risk. If you would invest 9,140 in Discover Financial Services on September 14, 2024 and sell it today you would earn a total of 8,640 from holding Discover Financial Services or generate 94.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.35% |
| Values | Daily Returns |
Discover Financial Services vs. Datagroup SE
Performance |
| Timeline |
| Discover Financial |
| Datagroup SE |
Discover Financial and Datagroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Datagroup
The main advantage of trading using opposite Discover Financial and Datagroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Datagroup 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 Datagroup will offset losses from the drop in Datagroup's 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 |
| Datagroup vs. Monster Beverage Corp | Datagroup vs. Allianz Technology Trust | Datagroup vs. Flow Traders NV | Datagroup vs. Albion Technology General |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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