Correlation Between Discover Financial and Futura Medical
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Futura Medical 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 Futura Medical 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 Futura Medical, you can compare the effects of market volatilities on Discover Financial and Futura Medical 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 Futura Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Futura Medical.
Diversification Opportunities for Discover Financial and Futura Medical
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Discover and Futura is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Futura Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futura Medical 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 Futura Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futura Medical has no effect on the direction of Discover Financial i.e., Discover Financial and Futura Medical go up and down completely randomly.
Pair Corralation between Discover Financial and Futura Medical
Assuming the 90 days trading horizon Discover Financial Services is expected to generate 0.59 times more return on investment than Futura Medical. However, Discover Financial Services is 1.7 times less risky than Futura Medical. It trades about 0.07 of its potential returns per unit of risk. Futura Medical is currently generating about 0.0 per unit of risk. If you would invest 9,416 in Discover Financial Services on September 4, 2024 and sell it today you would earn a total of 8,598 from holding Discover Financial Services or generate 91.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.38% |
| Values | Daily Returns |
Discover Financial Services vs. Futura Medical
Performance |
| Timeline |
| Discover Financial |
| Futura Medical |
Discover Financial and Futura Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Futura Medical
The main advantage of trading using opposite Discover Financial and Futura Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Futura Medical 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 Futura Medical will offset losses from the drop in Futura Medical's long position.| Discover Financial vs. Lendinvest PLC | Discover Financial vs. Induction Healthcare Group | Discover Financial vs. Cembra Money Bank | Discover Financial vs. Cardinal Health |
| Futura Medical vs. Hyundai Motor | Futura Medical vs. Toyota Motor Corp | Futura Medical vs. SoftBank Group Corp | Futura Medical vs. Halyk Bank of |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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