Correlation Between Discover Financial and Edita Food
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Edita Food 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 Edita Food 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 Edita Food Industries, you can compare the effects of market volatilities on Discover Financial and Edita Food 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 Edita Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Edita Food.
Diversification Opportunities for Discover Financial and Edita Food
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Discover and Edita is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Edita Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edita Food Industries 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 Edita Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edita Food Industries has no effect on the direction of Discover Financial i.e., Discover Financial and Edita Food go up and down completely randomly.
Pair Corralation between Discover Financial and Edita Food
Assuming the 90 days trading horizon Discover Financial Services is expected to generate 0.71 times more return on investment than Edita Food. However, Discover Financial Services is 1.4 times less risky than Edita Food. It trades about 0.07 of its potential returns per unit of risk. Edita Food Industries is currently generating about 0.01 per unit of risk. If you would invest 10,905 in Discover Financial Services on August 31, 2024 and sell it today you would earn a total of 7,338 from holding Discover Financial Services or generate 67.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.14% |
| Values | Daily Returns |
Discover Financial Services vs. Edita Food Industries
Performance |
| Timeline |
| Discover Financial |
| Edita Food Industries |
Discover Financial and Edita Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Edita Food
The main advantage of trading using opposite Discover Financial and Edita Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Edita Food 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 Edita Food will offset losses from the drop in Edita Food's long position.| Discover Financial vs. Neometals | Discover Financial vs. Coor Service Management | Discover Financial vs. Aeorema Communications Plc | Discover Financial vs. JLEN Environmental Assets |
| Edita Food vs. Live Nation Entertainment | Edita Food vs. mobilezone holding AG | Edita Food vs. Zinc Media Group | Edita Food vs. Grand Vision Media |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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