Correlation Between Discover Financial and Beowulf Mining
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Beowulf Mining 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 Beowulf Mining 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 Beowulf Mining, you can compare the effects of market volatilities on Discover Financial and Beowulf Mining 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 Beowulf Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Beowulf Mining.
Diversification Opportunities for Discover Financial and Beowulf Mining
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Discover and Beowulf is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Beowulf Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beowulf Mining 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 Beowulf Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beowulf Mining has no effect on the direction of Discover Financial i.e., Discover Financial and Beowulf Mining go up and down completely randomly.
Pair Corralation between Discover Financial and Beowulf Mining
Assuming the 90 days trading horizon Discover Financial Services is expected to generate 0.9 times more return on investment than Beowulf Mining. However, Discover Financial Services is 1.11 times less risky than Beowulf Mining. It trades about 0.3 of its potential returns per unit of risk. Beowulf Mining is currently generating about 0.23 per unit of risk. If you would invest 17,637 in Discover Financial Services on October 25, 2024 and sell it today you would earn a total of 1,956 from holding Discover Financial Services or generate 11.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 89.47% |
Values | Daily Returns |
Discover Financial Services vs. Beowulf Mining
Performance |
Timeline |
Discover Financial |
Beowulf Mining |
Discover Financial and Beowulf Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Discover Financial and Beowulf Mining
The main advantage of trading using opposite Discover Financial and Beowulf Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Beowulf Mining 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 Beowulf Mining will offset losses from the drop in Beowulf Mining's long position.Discover Financial vs. Toyota Motor Corp | Discover Financial vs. SoftBank Group Corp | Discover Financial vs. OTP Bank Nyrt | Discover Financial vs. ONEOK Inc |
Beowulf Mining vs. Discover Financial Services | Beowulf Mining vs. Manulife Financial Corp | Beowulf Mining vs. Clean Power Hydrogen | Beowulf Mining vs. Sparebank 1 SR |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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