Correlation Between Discover Financial and GlobalData PLC
Can any of the company-specific risk be diversified away by investing in both Discover Financial and GlobalData PLC 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 GlobalData PLC 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 GlobalData PLC, you can compare the effects of market volatilities on Discover Financial and GlobalData PLC 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 GlobalData PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and GlobalData PLC.
Diversification Opportunities for Discover Financial and GlobalData PLC
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Discover and GlobalData is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and GlobalData PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlobalData PLC 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 GlobalData PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlobalData PLC has no effect on the direction of Discover Financial i.e., Discover Financial and GlobalData PLC go up and down completely randomly.
Pair Corralation between Discover Financial and GlobalData PLC
Assuming the 90 days trading horizon Discover Financial Services is expected to generate 0.97 times more return on investment than GlobalData PLC. However, Discover Financial Services is 1.03 times less risky than GlobalData PLC. It trades about 0.12 of its potential returns per unit of risk. GlobalData PLC is currently generating about 0.07 per unit of risk. If you would invest 10,017 in Discover Financial Services on September 2, 2024 and sell it today you would earn a total of 8,226 from holding Discover Financial Services or generate 82.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.6% |
| Values | Daily Returns |
Discover Financial Services vs. GlobalData PLC
Performance |
| Timeline |
| Discover Financial |
| GlobalData PLC |
Discover Financial and GlobalData PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and GlobalData PLC
The main advantage of trading using opposite Discover Financial and GlobalData PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, GlobalData PLC 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 GlobalData PLC will offset losses from the drop in GlobalData PLC'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 |
| GlobalData PLC vs. Catalyst Media Group | GlobalData PLC vs. CATLIN GROUP | GlobalData PLC vs. Tamburi Investment Partners | GlobalData PLC vs. Magnora ASA |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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