Correlation Between Discover Financial and Argo Group
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Argo Group 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 Argo Group 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 Argo Group Limited, you can compare the effects of market volatilities on Discover Financial and Argo Group 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 Argo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Argo Group.
Diversification Opportunities for Discover Financial and Argo Group
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Discover and Argo is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Argo Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Group Limited 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 Argo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Group Limited has no effect on the direction of Discover Financial i.e., Discover Financial and Argo Group go up and down completely randomly.
Pair Corralation between Discover Financial and Argo Group
Assuming the 90 days trading horizon Discover Financial Services is expected to generate 2.07 times more return on investment than Argo Group. However, Discover Financial is 2.07 times more volatile than Argo Group Limited. It trades about 0.24 of its potential returns per unit of risk. Argo Group Limited is currently generating about 0.01 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 | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Discover Financial Services vs. Argo Group Limited
Performance |
| Timeline |
| Discover Financial |
| Argo Group Limited |
Discover Financial and Argo Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Argo Group
The main advantage of trading using opposite Discover Financial and Argo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Argo Group 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 Argo Group will offset losses from the drop in Argo Group'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 |
| Argo Group vs. Bank of Ireland | Argo Group vs. Atresmedia | Argo Group vs. Discover Financial Services | Argo Group vs. Live Nation Entertainment |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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